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Feb 09, 2013, 02.31 PM IST | Source: Moneycontrol.com

Strong UV sales drive M&M Q3 net profit up 26% at Rs 836cr

Utility vehicle maker Mahindra & Mahindra on Friday said standalone net profit for the third quarter rose 26 percent from a year ago to Rs 836 crore.

Nachiket Kelkar
moneycontrol.com

Utility vehicle maker  Mahindra & Mahindra on Friday said standalone net profit for the third quarter rose 26 percent from a year ago to Rs 836 crore.

Net sales for the three month period rose 29 percent year-on-year to Rs 10,643 crore.

According to a CNBC-TV18 poll, analysts were expecting M&M to report a net profit of Rs 823 crore, on revenue of Rs 10,911 crore.

Standalone EBITDA margin, however, declined to 11.2 percent from 12.1 percent a year ago, which disappointed the street.

M&M shares closed down 1.3 percent at Rs 884.60 on NSE on Friday.

Including its 100% subsidiary Mahindra Vehicle Manufacturers Ltd (MVML) the net profit was up 30 percent at Rs 915 cr, while revenue rose 28 percent to Rs 11,522.3 crore in Oct-Dec.

Last quarter, Mahindra sold 70,483 passenger utility vehicles, up 36 percent from a year ago and it also dispatched 3,814 Verito passenger cars.
6,500 vehicles were exported in Oct-Dec, M&M said.

A slowdown in some of its key markets like Sri Lanka, Bangladesh and Bhutan led to a volume de-growth in exports, said Pawan Goenka, president, automotive and farm equipment sector.

Competition has increased drastically in the UV space over the last 1-2 years, due to a surge in demand for predominantly diesel powdered UVs following a sharp rise in petrol prices. M&M, which makes the Scorpio, Bolero, XUV500 and Xylo range of UVs still remains the market leader with a share of 47.9 percent.

"All the products of the entity's UV portfolio continued to do well," the company said, adding the premium SUV Rexton it has launched from its South Korean arm Ssangyong stable has received "enthusiastic" response.

The company has so far sold over 55,000 units of the XUV500 SUV since it was launched around 16 months ago, Goenka said.

Tractor sales, however, were slow, with Mahindra & Swaraj branded tractor sales up marginally to 62,522 from 62,342 units.

Poor winter monsoon hurt tractor sales in some markets, especially the southern states dependent on this monsoon, he said in a post earnings conference call.

The company had earlier expected that at the industry level, tractor volumes in the current financial year would be close to that of last year.

However, Goenka now feels that will be a "stretch" now and the industry volumes could be marginally lower.

M&M had 41.5 percent market share in tractors last quarter.

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PRODUCT PIPELINE

M&M is currently working on three brand new products which will be launched from the end of FY2015.

In the next financial year (FY14) the company will launch at least four refreshes of its existing products. However, no new automotive launches are planned, except the already announced electric vehicle and the sub-four meter version of the Verito sedan, he said.

The company will also be launching a brand new tractor in FY14, he added.

MAHINDRA NAVISTAR

Goenka said on Friday that M&M has got final approval to buy Navistar's stake in their joint ventures and Mahindra will now be the 100 percent owner from next week.

M&M had announced in December that it planned to buy US-based Navistar International Corp's stake in their Indian joint ventures Mahindra Navistar Automotives and Mahindra Navistar Engines. As per the terms, M&M will have to pay about Rs 175 crore or USD 33 million for Navistar Group's stake in both ventures.

The two companies had entered into a truck and bus manufacturing JV in 2005, while the engines JV was formed in 2007. Navistar decided to drive away from the JVs saying that given Navistar's 2013 priorities, the capital and focus needs to be allocated to other business opportunities in the near term.

The overall sluggish demand for meidum and heavy trucks in India hit the joint venture too. Over April-Jan period, Mahindra Navistar sales fell 13 percent to 9,559 units.

Goenka said that trucks remain heavily discounted in the industry in the wake of the slowdown, but there are some signs of that coming down.

Also Read: Hindalco's Q3 net down 4% on higher finance cost

nachiket.kelkar@network18online.com

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