Hit by BS-III ban and transition to the goods and services tax, Mahindra & Mahindra on Friday missed analysts’ estimates to post a 20 per cent decline in its standalone net profit at Rs 766 crore during April-June quarter.
The net profit was impacted to the extent of Rs 91 crore during the quarter due to a provision of Rs144 crore made by the company for dealer support in respect of duty paid goods lying with dealers. “The unavailability of input credit for certain taxes paid, as well as due to tractors being exempt from excise duty in the earlier regime, the company had to ensure minimum impact for customers,” the company said in a statement.
Net sales during the period was moderately up by about 5 per cent to Rs 11,575.71 crore, while the operating margins remained under pressure. The company reported Ebitda (earnings before interest, tax depreciation and amortisation) of Rs1,266.56 crore, a fall of nearly 2 per cent, while the Ebitda margins contracted by 78 basis points to 10.94 per cent. Speaking to newspersons at the earnings conference, Pawan Goenka, managing director, M&M said, “This was an eventful quarter. It started with BS III ban which came in like a bombshell for the auto industry and it was followed by the GST transition. The industry though has managed these disruptions quite well.”
The company saw a moderate increase in the domestic vehicles volumes which grew by 1.2 per cent to a total of 1.12 lakh vehicles, which was led by a smart increase in the LCV Goods segment to 43,009 vehicles.
VS Parathasarathy, chief financial officer, M&M said, “The company’s LCV segment grew by a strong 20.7 per cent in the quarter, but we degrew in most other segments, especially in the Utility Vehicle (UV) sector. Our volumes in the farm equipment space rose by 13.5 per cent, better than the industry. This helped us achieve a market share of 45.8 per cent in the segment, which is the highest share for M&M in a single quarter.”
(With FE inputs)