M&M sees double digit growth in tractor sales in FY14
Mahindra & Mahindra feels tractor sales in the industry this year will easily exceed earlier expectations of 5-6 percent growth and grow in double digits in FY14.
August 13, 2013 / 20:11 IST
Nachiket Kelkar
moneycontrol.com
Mahindra & Mahindra feels tractor sales in the industry this year will easily exceed earlier expectations of 5-6 percent growth and grow in double digits in FY14."In this quarter tractor industry did extremely well...Tractor industry continues to remain robust. We do expect the industry growth will be significantly higher than what we had talked about in the beginning of the year, when we had set 5-6 percent target for the industry. Right now, we can easily say that the tractor industry growth should be in double digit," said Pawan Goenka, President, automotive and farm equipment sector.Also read: Domestic car sales down 7.4% in July: SIAMAfter sluggish growth for most of FY13, tractor sales have picked up in the last few months. In the April-June quarter, M&M's domestic tractor sales accelerated 26 percent year-on-year to 71,696 units. Exports were up 6 percent to 3,187 units.A good monsoon, increase in minimum support prices (MSP) for crops by government, coupled with the low base effect are driving tractor sales in India.M&M has a market share of 41.4 percent in tractors.AUTO SALES SLOWWhile tractor sales are outperforming, the automotive industry continues to see sluggish growth.According to data released by Society of Indian Auto Makers for July, utility vehicles saw a degrowth for the first time in four years.M&M, which is a market leader in UVs with a 46 percent share, sold 56,969 units in the first quarter.The overall automotive industry shrank 2 percent.The 3 percent additional excise duty on SUVs, increasing diesel prices, expensive loans and the overall economic slowdown is hurting growth, Goenka said.He sees no signs of reversal anytime soon and says the government needs to provide a stimulus package to the auto industry."The industry continues to be in a slowdown. As of now there is no clear sign of a turnaround in the industry and it is not possible to predict a growth or degrowth this year," he added.Q1 EARNINGS BEATM&M's first quarter standalone net profit beat analysts expectations, rising 29 percent to Rs 938 crore, boosted by the strong growth in the tractor business and a higher other income.Revenue for the three month period was up 7 percent to Rs 10,022 crore.Analysts on an average has expected the India's largest UV maker to report net profit of Rs 870 crore, on total income of Rs 10,264 crore, according to a CNBC-TV18 poll.The company's revenue from farm equipment business surged to Rs 3,899 crore from Rs 3,078 crore, on the back of strong tractor sales.However, automotive segment's sales declined to Rs 6,121 crore from Rs 6,279 crore, a year ago.Other income surged 2.7 times to Rs 164 crore in the April-June quarter, which included dividend received from subsidiaries.M&M's earnings before interest, taxes, depreciation & amortisation (EBITDA) rose 16 percent to Rs 1,287 crore while operating profit margin gained 100 bps to 12.8 percentIts South Korean subsidiary Ssangyong Motor saw revenue surge 27 percent.The maker of Rexton and Korando SUVs broke even for the first time since it was acquired by M&M in March 2011, with a net profit of Rs 41 crore in the quarter.M&M shares closed at Rs 873.75, up 1.5 percent on NSE. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
