The Hindu Business Line : M&M Q1 net up 41 pc

MR KESHUB MAHINDRA (left), Chairman, Mahindra & Mahindra Ltd, and Mr Anand G. Mahindra, Vice-Chairman, addressing the company's AGM in Mumbai on Wednesday. - Shashi Ashiwal

Mumbai , July 26

Mahindra & Mahindra (M&M) has reported a 41-per-cent rise in profit after tax for the quarter ended June 30, 2006. Net profit rose to Rs 204.2 crore from Rs 145.3 crore in the corresponding period of the previous year.

On the celebration of M&M's 60th year (diamond jubilee year), all companies in the group including the auto division have decided to give one per cent of the profit after tax for social cause, said Mr Keshub Mahindra, Chairman, M&M, at the company's AGM on Wednesday.

Sales for the quarter increased to Rs 2,548.6 crore (Rs 2,069.5 crore), registering a growth of 23 per cent. The company has been able to maintain margins at 12 per cent against 10.65 per cent in the corresponding period last year, said Mr Bharat Doshi, Executive Director, Finance and Corporate Affairs, M&M.

Earnings before interest, depreciation and tax amounted to Rs 315.6 crore (Rs 213.3 crore).

The major contributor to sales was the tractor segment which reported a rise of 29.05 per cent, said Mr Doshi. The segment registered sales of 27,358 units over 21,200 units a year ago.

Sales for the all-new Scorpio grew by 17 per cent to 8,093 units compared to 6,906 units. Raw material prices were maintained at the same level as the previous year by the company although the industry as a whole faced rising input costs, he said.

As a result of this, the selling price of the vehicle remained the same leading to larger volume sales. The company retains its utility vehicle market share at 43.7 per cent. It is also in the process of expanding capacity.

Vehicle exports

The company's vehicle exports grew by 55 per cent with an export of 1,329 vehicles in the current quarter compared to 856 vehicles a year ago. While tractor exports grew to 2,316 units from 2,187 units. The volatility in prices of oil, rubber, steel and other metals is expected to put pressure on costs, said the company with regard to the outlook for the period ahead.

Increase in interest rates and exchange rate fluctuations can further add to the uncertainties, said a company statement. "However the company is confident of meeting these challenges with its continued focus on market performance and cost reduction and efficiency improvements."

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