M&M on Wednesday reported a net profit of Rs 874 cr for the quarter ended March 31, a rise of 44 per cent over the net profit of Rs 606 cr in the year-ago period. Good demand for its diesel-powered sport utility vehicles and a one-time gain from the Mahindra Automotive Distributors (MADPL) business aided the rise in net profit.
The company stated excluding the exceptional gain of Rs 108 cr from the MADPL business during the quarter, its net profit stood at Rs 802 cr, a rise of 19 per cent.
M&M had earlier merged MADPL, which includes the Verito business, with itself. Due to the merger, unabsorbed tax losses related to MADPL’s automotive business were available to the company, and this led to a one-time tax saving during the quarter, the company said.
Revenue from the automotive segment, which contributed 70 per cent to the total sales, continued to rise, with demand outpacing supplies for products such as the XUV 500. Diesel-powered products have seen a rise in demand, owing to the recent rise in petrol prices.
M&M’s automotive segment grew 67 per cent, while muted demand for tractors and allied products resulted in the farm equipment segment contracting one per cent.
Net sales for the quarter rose to Rs 9,241 crore, compared with Rs 6,633 crore in the year-ago period, a rise of 39 per cent.
“The growth in the company’s profit, despite the relentless increase in material costs, is due to a good volume performance by both the vehicle and tractor categories, and tight control on expenses. The company expects growth to pick up in the second half of 2012-13,” M&M said in a statement.
High raw material costs raised the company’s overall expenses 43 per cent to Rs 8,617 crore during the quarter, against Rs 6,015 crore reported in the year-ago quarter.