Backed by higher tractor sales and larger savings on operational expenses, Mahindra & Mahindra (M&M) on Wednesday reported 9.78 per cent jump in its standalone net profit to Rs 989.5 crore during the second quarter of FY14.
The company’s overall income declined by 8.74 per cent to Rs 8,814.33 crore against Rs 9,659.2 crore. As per the official statement by the company, operational expenses fell 10 per cent to Rs 7,981.64 crore.
On a consolidated basis, net profit rose 5.18 per cent to Rs 1,027.6 crore. Reflecting the general dip in non-tractor sales, gross revenue declined 8 per cent to Rs 9,887.6 crore.
M&M attributed the decline in revenue to the challenging times for the domestic auto industry, with overall volumes shrinking 4 per cent during the quarter.
“Despite this, the entity could deliver a growth in the profits in the quarter due to a strong sales performance by its farm equipment sector and a tight control on material costs and all expenses,” the company said.
Brokerage firm Motilal Oswal said M&M's net income was higher than its estimate and attributed it to higher tractor sales. The tractor business margin rose 30 basis points to 17 per cent while volumes dipped, it said.
“We expect the normal monsoon could lead to a healthy recovery in tractor volumes, while the auto division could continue to lag due to lack of a visible catalyst,” the brokerage said.
Mahindra sold 47,388 vehicles in the passenger utilityvehicle segment, while it sold 2,879 cars.Domestic tractor sales grew 22.3 per cent to 57,549 units from 47,065 sold in the same period a year earlier on the back of a good monsoon and overall growth in the segment.
The company said it appointed VS Parthasarthy as chief financial officer in place of executive director and group chief financial officer Bharat Doshi, who decided to step down after 40 years of service.Doshi will continue with the company as an additional director, the release said.