Revenue from operations declined 34.8 percent year-on-year, which was ahead of Street estimates, to Rs 9,005 crore in Q4FY20.
Mahindra and Mahindra on June 12 posted a massive loss of Rs 3,255 crore in the quarter ended March 2020 due to the write-down of investment in Ssangyong and other international subsidiaries.
Profit in the year-ago quarter was Rs 969.2 crore.The profit before one-time loss stood at Rs 890 crore for the March quarter against profit of Rs 1,515 crore in the same period last year, said the automobile company in its BSE filing.
Here are the highlights of Mahindra & Mahindra's Q4 FY20 earnings call compiled by Narnolia Financial Advisors:
Management Participants: Anand Mahindra- Chairman, Pawan Goenka- MD & CEO, Anish Shah- Dy MD & Group CFO, Rajesh Jejurikar- Executive Director
According to the management of Mahindra & Mahindra, Q4 FY20 volumes were impacted majorly by three factors: a) disruption in the supply chain from China due to COVID-19, b) fire at a key supplier's plant in February 2020 and c) plant shutdown in the last 10 days of March due to the lockdown in the country.
M&M’s JV with Ford: The start was delayed because of COVID-19. Major Benefits will include - co-sharing of investments & technology, economies of scale in joint sourcing, joint product development and capacity utilization, exports to emerging markets.
Farm equipment was up by 1 percent and auto LCV was less than 3.5T up 1.2 percent.
The company's capital allocation strategy will continue to stay strong, going ahead. It had good cash flows from rural. In May 2020, the company saw good financing, as well as, good amount of collections, were made. June 2020 is also going well, the management said. For FY21 it will remain largely the same considering its three big projects are at the final stage of product development so now reduction can’t be done.
For FY22-FY24 Capex is being reduced from Rs 4,000 crore per annum to Rs 3,000 crore per annum, the management said.
Farm Equipment Sector Outlook:
Strong rural opportunity, very good reservoir levels, very good rabi output and significant govt spending are expected to bring good pickup. On the tractor side, key challenge for the company is to ramp up operations. More than 90 percent of dealers have reopened and plants are operating at 80 percent plus capacity, they said.
The key focus will be to strengthen core domestic business, build farm machinery, turnaround global businesses, build a moat through farming as a service (faas) and k2 project. “Krish-e”: Mahindra Krish-e farming services are on a mission to bridge the gap between agriculture and new-age technology in India. Project K: It is Light Weight Compact Global Tractor Project ranging from 13-70 HP tractors range, the management added.
North America tractor business will be very important part of its global turnaround strategy. Rural is very important for the company and constitute more than 45 percent of its volumes.
Automotive sector outlook:
Key focus: The company is looking for growth in rural, goods mobility and improving dealer and supplier’s financial health. Plants are operational at 30 percent capacity. All suppliers are working and 80 percent of its dealers are operational. XUV300 and Bolero have received very good feedback and is going to be the volume drivers going ahead. Two new models W601, Z101 are to be launched in early FY22.Supro focus: Traction seen in PV and goods mobility post COVID era, the management of Mahindra & Mahindra said.