Homegrown auto major Mahindra & Mahindra (M&M) on Tuesday reported a 88 per cent year-on-year decline in its net profit after tax (PAT) at Rs 162 crore for the second quarter ended September 30, 2020, dented by impairment losses. The company had posted a net profit of Rs 1,355 crore in the same quarter last year. The results include figures of its commercial vehicle unit, Mahindra Vehicle Manufacturers.
Excluding impairment losses, the profit was just 3 per cent down to Rs 1,311 crore as compared to Q2 FY20, despite a substantial fall in other income in the current quarter as compared to the previous year's same quarter.
"The exceptional items on account of impairments have led to a drop in the profit after tax in the current quarter as compared to the corresponding quarter in the previous year," M&M said in a regulatory filing.
Total revenue for the auto major climbed by 6 per cent to Rs 11,590 crore from Rs 10,935 crore in the year ago period.
The Mumbai-based firm sold 87,332 units in Q2 FY21, down 21 per cent from 1,10,824 units in the year-ago period. Tractor sales, however, rose by 31 per cent to 89,597 units from 68,359 units a year ago.
The company expects that tractor demand will remain robust during the upcoming festive season as increase in MSP for Kharif crops and important reforms in the agriculture sector helped tractor demand to bounce back after April 2020.
"Timely relaxation of the COVID lockdown restrictions for the Agricultural sector supported by healthy reservoir levels, good increase in MSP for Kharif crops and important reforms in the agri sector announced by the government focused on improving the state of agriculture in India in the mid to long term have helped tractor demand to bounce back after April 2020. On the back of these positive factors, it is expected that tractor demand will remain robust during the upcoming festive season," it said.
On future outlook, Mahindra said it expects manufacturing capacity utilisation to recover in Q3 and activity to gain some traction from Q4 onwards as government spending and rural demand improves. "However, capex and exports are likely to remain subdued," it said.
Meanwhile, shares of Mahindra & Mahindra were trading at Rs 620.35, up 0.65 per cent, on the BSE.
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