The net profit of the country’s biggest utility vehicle manufacturer Mahindra & Mahindra for the fourth quarter ended March 31, 2012 was marginally up by 1.6 per cent at Rs 889.1 crore, against Rs 874.4 crore in the year-ago period. This was mainly on the back of improved sales, coupled with the company’s policy of refraining from providing discounts, even in a difficult industry environment, according to Pawan Goenka, President, Automotive and Farm Equipment, at M&M.
The company reported an exceptional gain of Rs 90.6 crore on account of sale of 34 lakh shares in M&M’s subsidiary Mahindra Holdings and Resorts India Ltd.
Exceptional gains
There was a Rs 108-crore exceptional gain in Q4 of the previous fiscal (2011-12), also arising from the merger of a subsidiary with M&M. Besides there was a one-time tax gain of Rs 148.5 crore in Q4 of the previous fiscal (2011-12)
The net revenue from sales was also up 12.03 per cent this quarter, at Rs 10,486.53 crore, against Rs 9,380.84 crore in the corresponding period last year.
The company sold 72,076 vehicles in Q4 — 23 per cent more than in the year-ago period. However, the company sold 46,107 tractors under the Mahindra and Swaraj brands against 48,517 tractors sold in Q4 last year.
The operating margin for the combined entity (M&M and Mahindra Vehicles Manufacturers Ltd) during the quarter improved to 14.4 per cent in Q4 of this year from 12 per cent in Q4 March 2012.
The company management, acknowledging the impact of the slowdown in industry and the 3 per cent excise duty hike on SUVs announced this Budget, maintained that it was looking at various means to neutralise the impact of the hike.
“Owing to this 3 per cent hike, SUV volumes for the auto industry have seen a de-growth of 14 per cent compared to growth of 35-40 per cent a year in this segment before February,” added Goenka.
M&M also announced a total spending of Rs 10,000 crore (Rs 7,500 crore towards capex and Rs 2,500 crore investment in group companies over the next three years).
V.S. Parthasarathy, Mahindra Group CIO said: “We would be utilising these proceeds for capex, product launches, capacity additions and supporting existing ventures. We plan to fund this amount through our internal accruals comprising cash balance of Rs 4,000 crore from our profits last quarter. We also have a slew of options including stake sale in any of our listed companies and borrowing funds among others.”
Special Dividend
The M&M Board has recommended a dividend of Rs 12.50 (250 per cent) per share and a special dividend of Re 0.50 (10 per cent) per share aggregating Rs 13 (260 per cent) for each share of face value of Rs 5.
The special dividend is being recommended in view of the profit made by the company from the sale of part of its shareholding in its subsidiary Mahindra Holidays & Resorts India.
The M&M scrip was the top gainer today, moving up 4.6 per cent to Rs 1,004.60.