The Hindu : Business : M&M's record profit; pays Rs. 13 per share

Online edition of India's National Newspaper
Tuesday, May 31, 2005

Business

Business

M&M's record profit; pays Rs. 13 per share

Staff Correspondent

MUMBAI: In spite of sustained pressure on input costs such as steel, Mahindra & Mahindra (M&M) has reported record profit and has been able to maintain strong margins on its performance in 2004-05. The net profit was up 47 per cent at Rs. 512.70 crore against Rs. 348.50 crore. The board of directors has recommended a dividend of 100 per cent and a special dividend of 30 per cent aggregating Rs. 13 per share. Gross sales were Rs. 7,695.60 crore against Rs. 5,914.50 crore in the previous year. Net sales were up 34 per cent at Rs. 6,660.60 crore against Rs. 4,970.80 crore.

The operating margins were up at 11.57 per cent (10.84 per cent) and have been on an uptrend for the last five years. The profit before exceptional items and tax is Rs. 700.60 crore; an increase of 71 per cent. The improvement in profit is attributed to the strong sales performance by both the automotive and farm equipment sectors and continued cost control measures.

During the year, the utility vehicles (UV) sector sales crossed 100,000 mark, touching 1.11 lakh units, a growth of 22 per cent, while three wheeler sales were up 32 per cent as compared to an industry decline of three per cent.

Anjanikumar Choudhari, President, Farm Equipment Sector, M&M, said, was making rapid progress on the export front. "Last year, exports to the U.S. amounted to $128 million and we hope to improve on that this year. Two weeks ago, we signed an asset purchase agreement with our Chinese partner and also with a distributor in Serbia. In February, we established Mahindra Australia."

Alan Durante, President, automotive sector, said M&M's 51:49 per cent tie-up with Renault for the `Logan' will see the product being rolled out in February 2007 but the factory could be located at Nashik, Zahirabad or Uttaranchal, "depending on the fiscal incentives the chief ministers of the state provide. The location will be finalised in the next two-three weeks."

"The automotive sector has seen a growth of 23-25 per cent in the last three years. We do not expect that rate and a 10-15 per cent growth is quite possible this year," said Mr. Durante and added that the first quarter of the current year was not that good owing to confusion regarding Bharat Stage I & II emission norms, the resultant price increase and the uncertainty relating to VAT.

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