Tractor and utility vehicle major Mahindra & Mahindra’s net profit fell 10% to R662 crore for the third quarter ended December, 2011. The company had posted R735 crore during the corresponding quarter a year ago.
The net revenue surged 34% at R8,216 crore but a 42% increase in
raw material costs at R5,903 crore dented the bottomline.
The company said the decline in profitability is primarily due to an exceptional profit of R117.5 crore that it had during the same quarter last fiscal on account of sale of its holdings in building material manufacturer Owen Corning India Ltd.
“Without the exceptional profit that we had in the same quarter last fiscal, our net profit would have grown over 7% this quarter. The overall numbers are as per our expectations,” said Pawan Goenka, president, auto and farm equipment sector, Mahindra & Mahindra.
M&M’s utility vehicle sales during the October-December quarter grew 23% at 51,702 units while its tractor sales grew 12% at 62,342 units.
M&M had hiked vehicle prices by 1.5% in October to offset the impact of raw material price hike. “We have not seen the raw material price lowering,” added Goenka.
Meanwhile, the company said it has closed the second phase of booking for its latest sports utility vehicle XUV500 and has received over 25,000 orders in a period of 10 days.
The company will select 7,200 customers through lucky draw from among the applicants. Goenka said the company will increase the production from the current 3,000 unit per month to 5,000 units a month in the near future.
M&M’s share price fell 2.9% at R689.5 on the BSE on Tuesday.
(With inputs from PTI)