Date:01/02/2006 URL: http://www.thehindubusinessline.com/2006/02/01/stories/2006020102420100.htm

Back LCV biz transfer propels M&M Q3 net 75.28 pc

Our Bureau

Mumbai , Jan 31

HELPED by steep gains under exceptional items, Mahindra & Mahindra Ltd (M&M) today reported 75.28 per cent rise in profit after tax for the quarter ended December 2005 to Rs 233.46 crore from Rs 133.19 crore in the corresponding previous period.

Profit before exceptional items and tax grew by 37.22 per cent to Rs 270.65 crore (Rs 197.24 crore).

Exceptional items for the quarter zoomed to Rs 46.91 crore (Rs 1.46 crore), powered in the main by profits - Rs 41.75 crore net of tax - accruing from transfer of rights of its light commercial vehicles (LCV) business to the joint venture, Mahindra-International.

Third-quarter net sales/income from operations moved up by 24.54 per cent to Rs 2207.17 crore (Rs 1,772.28 crore). The company looks forward to the rest of the year with "watchful confidence."

Speaking to newspersons, Mr Bharat Doshi, Executive Director, said that continued focus on costs, benefits of strategic sourcing, and volume growth, particularly the 26 per cent increase in tractor sales, had contributed to the quarter's numbers.

Operating profit margin for the third quarter touched 12.87 per cent (11.94 per cent).

"We are seeing the trend of production costs easing. But remember, we are also in times of volatility," he added.

M&M's bid for a tractor plant in Romania has entered the final stretch with authorities awaiting approval from the Competition Council of the European Union.

"We are waiting for the Romanian Government to complete that process. We have come to an agreement on most aspects of the transaction," said Mr A. Choudhari, President (Farm Equipment Sector).

According to Mr Uday Phadke, President (Finance & Legal Affairs), the company does not need to raise any fresh resources for the deal as funds will not be an issue to wrap it up. However, he refused to disclose the size of the transaction.

Mr Choudhari said that the final quarter of the fiscal should see industry growth of 10-12 per cent, and M&M faring better.

Volume growth for the auto sector was quite modest at six per cent and the utility vehicles business inched up in market share by two points to near 50 per cent.

"Going forward, we do not expect to get back to the 25-30 per cent industry growth rate that we used to see earlier. But we do hope that it gets to double digits," said Dr Pawan Goenka, President (Auto Sector).

For the first nine months, M&M clocked 48.87 per cent growth in profit after tax to Rs 535.93 crore (Rs 360 crore) on a 24.93 per cent increase in net sales/income from operations to Rs 5,933.85 crore (Rs 4,749.87 crore).