M&M Q3 standalone net profit down 9.8%

Mahindra & Mahindra reported a decline in profit for the third quarter ended December 31,2011.

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Homegrown auto major Mahindra & Mahindra today reported 9.8 per cent decline in its standalone net profit for the third quarter ended December 31,2011 at Rs 662.15 crore as compared to the same period last fiscal.

The company had posted a standalone net profit of Rs 734.68 crore in the third quarter last fiscal.

It said the decline in profitability is primarily due to an exceptional profit of Rs 117.5 crore that it had during the same quarter last fiscal on account of sale of its holdings in Owen Corning India Ltd.

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Net sales during the third quarter this fiscal stood at Rs 8,327.2 crore as against Rs 6,074.46 crore in the same period last fiscal.

“Without the exceptional profit that we had in the same quarter last fiscal,our net profit would have grown over 7 per cent this quarter. The overall numbers are as per our expectations,” Mahindra & Mahindra President (Automotive and Farm Equipment sectors) Pawan Goenka said.

When the overall auto industry has not grown so much,M&M has managed to grow its sales at 37 per cent,he added.

“During the quarter there were huge pressure from material cost and it has been a challenge,” Goenka said.

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The company said during the third quarter this fiscal its expenditure on raw materials increased to Rs 4,579.22 crore as against Rs 3,777.35 crore in the year-ago period,a jump of 21.22 per cent.

During the period under review,passenger utility vehicle segment witnessed sales of 51,702 units,a growth of 22.9 per cent over the same period last fiscal,it said.

On the outlook,the company said it expects margins will continue to be under pressure in the near future.

“The current year-to-date,with global macro risks particularly in the oil markets,has been a challenging one…There are,however,some positive economic signals on the horizon at the moment,” it said.

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It cited positive news flow from the US and the long term refinancing operations announced by the European Central Bank in December as factors that have helped calming global financial markets.

“Portfolio flows to India,as a consequence,have picked up considerably in the recent weeks,easing pressure on the balance payments and the exchange rate,” it said.

Also,domestic inflation,while still high,has begun trending down raising hopes of a decline in interest rates,the company said.

Scrips of Mahindra & Mahindra Ltd were trading at Rs 690.50 per share on the BSE during afternoon trade,down 2.73 per cent from the previous close.

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