M&M Q4 net up 44%; names Anand Mahindra as Chairman and MD

Moneycontrol Bureau

Utility vehicle maker Mahindra & Mahindra beat street expectations on Wednesday, with standalone net profit of Rs 874 crore, up 44% from a year ago, helped by one time gains and lower tax provisions, apart from strong sales growth. The company also said, Keshub Mahindra would retire as Chairman of M&M and would become Chairman Emeritus. Anand Mahindra will now become the new Chairman and MD, effective after the annual general meeting in August, it said. The Mahindra-group company's revenue in the fourth quarter rose 39% from a year ago to Rs 9,387 crore. Analysts on average were expecting a net profit of Rs 600 crore on revenue of Rs 8,270 crore, according to a CNBC-TV18 poll. M&M had exceptional gain of Rs 108 crore on a tax saving in the fourth quarter. It made Rs 28 crore towards provision for taxes, significantly lower than Rs 201 crore provisions last year. "The growth in the profits of the company, despite the relentless increase in material costs, is due to a good volume performance by both vehicles and tractors and tight control on expenses," M&M said. Its EBITDA (earnings before interest, taxes, depreciation and amortization) margin, however, declined to 10.3% from 12.9%. Automobile sales in India, especially passenger cars, hit speed bumps last year, amid expensive loans and high petrol prices. M&M, with its portfolio comprising of mostly diesel driven SUVs and commercial vehicles, bucked the trend. The company sold 2.02 lakh utility vehicles last year, up near 20% year-on-year, while it sold 17,839 Verito cars, 78% higher than a year ago. M&M has a market share of 55.1% in utility vehicles and 9.5% in cars. Its tractor sales were up 10% to 2.37 lakh units in 2011-12. Tractor sales, have, however, slowed down in the last few months. On a consolidated basis, M&M said its net profit in 2011-12 was up 1.5% at Rs 3,127 crore, while gross revenue and other income for the year rose 59% to Rs 63,358 crore. The sluggish growth in group profit and surge in revenue is due to the inclusion of results of South Korean Ssangyong Motor, M&M said. Excluding Ssangyong, M&M's consolidated net profit was up 15%, while gross revenue rose 28%, it said. The Mahindra group had 114 subsidiaries, 6 joint ventures and 11 associates as of March-end. ROAD AHEAD Last year, while agriculture and services sectors displayed resilience, the unsettled global outlook and weak domestic economic environment, took a heavy tool on industrial activity and growth in India, M&M said. It said the near-term outlook for the economy remains "quite challenging," with global risks escalating and continued weakness in the domestic macro environment. The company said it will continue its focus on new product introductions, process innovation and cost controls to meet the macro challenges.  M&M expects growth to pick up in the second half of 2012-13. M&M shares were trading up 0.1% at Rs 656.10 on NSE in late afternoon trade. Nachiket Kelkar
nachiket.kelkar@moneycontrol.com