M&M net skids on liquidity, falling demand

Board recommends 170% dividend, approves merger, absorption of Mahindra Vehicle Manufacturers

Automotive major Mahindra and Mahindra Ltd.’s (M&M) standalone net profit for the fourth quarter ended March 31 declined 20% to ₹849 crore compared with the ₹1,059 crore in the year-earlier period.

This was on account of the liquidity crisis bogging the sector down and lack of demand from the market.

Muted demand in rural India coupled with the NBFC crisis led to a tight liquidity situation, resulting in a fall in demand for tractors and automobiles in general, the firm said. “After seven successive quarters of growth, the domestic automotive industry witnessed a reversal in Q4, mainly due to negative growth of 2% and 5.9% in passenger vehicles and commercial vehicles, respectively. Despite such headwinds, M&M successfully weathered these challenges. The launch of XUV 300, Marazzo and Alturas G4 helped to maintain growth in the utility vehicles segment,” said Pawan Goenka, MD, M&M. During the quarter, the company reported a total income of ₹14,272 crore compared with ₹13,479 crore, up about 6% from the year-earlier period.

The company sold 1,63,937 units in the quarter, compared with 1,56,453 units, up 5%. It sold 56,903 tractors compared with 66,885 units, down 15%. Exports rose 8.7% to 13,541 units compared with 12,459 units in same quarter last year.

For the financial year ended March 31, the company reported a net profit of ₹4,808 crore compared with ₹4,346 crore, up 11%.

Total income rises

During the year, the company’s total income increased to ₹55,303 crore compared with ₹50,481 crore in the previous year, up 19.6%.

On a consolidated basis, M&M reported a profit after tax of ₹6,017 crore compared with ₹7,958 crore in the previous year, down 24.4%

The board has recommended a dividend of ₹8.50 (170%) per equity share. The board has also approved, subject to regulatory approvals, the merger and absorption of Mahindra Vehicle Manufacturers Ltd. (MVML), its 100% subsidiary, into itself effective April 1, 2019.

Combined profit drops

M&M and MVML reported a 16% decline in profit after tax after exceptional items to ₹969 crore for the Q4 as against ₹1,155 crore. Revenue during the period increased 5% to ₹14,055 crore.

For the fiscal, M&M and MVML jointly reported 17% growth in profit after tax after exceptional items to ₹5,401 crore versus ₹4,623 crore in the previous year. Revenue and other income rose 12% to ₹54,478 crore.

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