Utility vehicles major Mahindra & Mahindra on Friday reported a 3.35 per cent dip in standalone net profit at Rs852.2 crore in the first quarter due to fall in overall sales and expects strain to continue in the tractor business in the current quarter as well.The home-grown auto giant had posted a standalone net profit of Rs881.78 crore in the April-June quarter of the last fiscal.
“I don’t see the farm equipment business picking up in the September quarter as well. Our tractor sales degrew 12 per cent in July and I expect sales degrowth to continue in the remaining months of quarter 2. But with a better-than-expected monsoon, I see some pick up from October and hopes to close the year with around 6 per cent growth,” executive director and head of automotive business Pawan Goenka said here.
Net sales declined close to 3 per cent during the reporting quarter to Rs9,708.05 crore, he added.In the reporting quarter, Mahindra volumes fell 2.7 per cent while the industry grew over 7 per cent, while its tractor sales plunged 16.4 per cent against the industry’s 16 per cent fall, pulling down realisation in the tractor segment by 13 per cent and those from the auto segment flat.
However, despite poor sales, the company could post the best margins at 14.3 per cent in past nine quarters, boosted largely by benign raw material prices coupled with cost cutting measures, said group chief financial officer G Parathasarathy.
During the period under review, Mahindra along with its wholly-owned manufacturing arm Mahindra Vehicle Manufacturers sold 49,354 vehicles, while tractor sales stood at 59,348 units in the domestic market.But the tractor industry de-grew by 16.4 per cent in the quarter, and degrowth was led by M&M with a sale of only 59,348 tractors, pulling down its market share to 41.5 per cent from over 45 per cent a year ago.