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M&M Q4 PAT dips 20 pc to Rs 849 cr; to expand Chakan plant

twitter-logo PTI        Last Updated: May 29, 2019  | 21:43 IST

(Eds: Adding details and quotes) Mumbai, May 29 (PTI) Home grown auto major Mahindra & Mahindra (M&M) Wednesday reported a 19.85 per cent decline in standalone profit after tax to Rs 848.81 crore for the fourth quarter of 2018-19. The company had posted a profit of Rs 1,059.09 crore in the corresponding period of 2017-18, it said. Revenue from operations rose to Rs 14,035.16 crore during the quarter as against Rs 13,307.88 crore in the fourth quarter of 2017-18. Despite challenging conditions in the last quarter of the previous fiscal, the company recorded its highest-ever volume for passenger vehicles and tractors, as well as exports, M&M Chief Executive Officer and Managing Director Pawan Goenka said. The Society of Indian Automobile Manufacturers (SIAM) has asked the government to reduce GST on cars from 28 per cent to 18 per cent, he said, adding that the recent changes to axle load norms for CVs have caused significant loss to commercial vehicle industry. According to the company, the muted demand in rural part of the the country on account of poor distribution of the southwest monsoon, weak agricultural income due to poor price realisation and stress in non-banking financial companies led to tight credit conditions which affected sales. Besides, low demand in urban part of the country and overall sluggishness in the economy further led to a decline in both tractor and automotive industry during the March quarter of the previous fiscal. Goenka said the company aims to focus on regaining its lost market share in the utility vehicle segment, strengthening its share in commercial vehicle space with the new Furio brand, making the new Treo three-wheeler available across its CV dealerships and building digital business enterprise. For the full fiscal 2018-19, the company posted a profit of Rs 4,796.04 crore as compared with Rs 4,356.01 crore in 2017-18, thereby registering a growth of 10.1 per cent. Revenue from operations during the year rose to Rs 53,614 crore as against Rs 49,444.99 crore in 2017- 18. Total vehicle sales during March quarter stood at 1,63,937 units as against 1,56,453 units in the year-ago quarter, a growth of 5 per cent. The company said it sold a total of 77,607 passenger vehicles in the quarter, logging a growth of 7 per cent over the year-ago period. The XUV300, which was launched during the quarter, contributed 6.8 per cent to the growth in utility vehicle sales with a market share of 27.9 per cent. Tractor sales were at 56,903 units in the fourth quarter as compared with 66,885 units a year ago, a fall of 15 per cent. Goenka said the company was seeing a 20 per cent increase in capex and investment over a three year cycle. "Atleast for Mahindra we are not slowing down, we are infact increasing our capex and investment by 20 per cent over a three year cycle," he said. He said M&M has now slowed down on product development, and added, "we are working as aggressively as we have in the past on new product launches." This calendar year the thrust is on BS VI transition, he said and added that by next financial year the company will get to product launches. He also said that the company is currently making a significant investment in capacity expansion in its Chakan plant. In the last few years, the company generally had Rs 10,000 crore as capital expenditure and Rs 5,000 crore as investment in a three-year cycle, Group CFO V S Parthasarathy said. "We are seeing an upsurge in investment. In the next cycle, we have Rs 12,000 crore in capex and Rs 6,000 crore in investment," he said. New government policies, availability and affordability of finance, monsoon, trade barriers and sanctions as well as BS VI transition are the five factors that will impact the course of the industry in the current fiscal, Goenka said. Domestic economic activity had weakened during 2018-19, especially during the second half and there are continued uncertainties with respect to the extent of monsoon activity for this year, the company said. The expectations in global scenario are also muted due to the potential for further escalation in global trade tensions, it said. In this scenario, the new government, coming back with a decisive mandate, provides cause for optimism, signalling a period of political stability, continuity in governance and consistency in policy decisions, it said. The government's 100 day plan also demonstrates its resolve to hit the ground running, it said. The inflation projections are benign and it is expected to remain below the target level of 4 per cent, leading to expectations of continued accommodative policy stance by the RBI, the company added. These as well as other factors like improved bank credit offtake, increased financial flows to the commercial sector and expected stability in crude oil and other commodity prices provide reasons for recovery in economic growth in the coming quarters, it said. Shares of the company Wednesday ended 0.25 per cent higher at Rs 672.25 apiece on the BSE. PTI MSS IAS RKL AP RVK RVK

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