M&M group net plunges 78% as demand slide continues(Eds: Adding more details and quotes)

M&M group net plunges 78% as demand slide continues(Eds: Adding more details and quotes) Mumbai, Nov 8 (PTI) Mahindra & Mahindra on Fridaysaid its consolidated net income plummeted 78.44 percent to Rs368.43 crore in the quarter to September as the volumes fellsharply even though the automaker could maintain strongmargins.

On a standalone basis, the company did better with anet income of Rs 1,355 crore, down 23.8 percent, thanks to arelatively better show by the tractor arm.

Consolidated revenue stood at Rs 23,935.93 crore, downalmost 6 percent from a year ago, of which automotive revenuestood at Rs 12,058.79 crore, down from Rs 14,330.54 crore andfarm equipment revenue stood at Rs 5,369.89 crore marginallydown from Rs 5,451.20 crore, pulling down it pretax profit byover 13.7 percent to Rs 702 crore.

During the quarter, its automotive volume dipped 21percent to 1,10,824 from 1,41,163 units, while tractor salesstood at 68,359 units, down 6 percent from 73,012 units, whilethe industry volume plunged 10 percent.

Despite this, the company marginally improved itsmargins by 10 bps to 14.1 percent during the quarter from theprevious three months period, thanks to the cost-cuttingmeasures coupled with stable input prices, primarily metals.

Addressing the media, managing director Pawan Goenkachose not to offer a volume or revenue guidance saying, themarket is so unpredictable that it is virtually impossible forhim to correctly say how the next five months will be.

'However, October has been extremely good, thanks tothe festive demand coupled with huge discounts. The net resultis that after 12 months, the industry could contain inventorypile-up, which began with the drastic fall in retail sales in2018 Diwali. Currently, industry-wide inventory is at a five-year low and I hope it continues to remain so,' Goenka said.

He also said a better picture can emerge only afterlooking at the November and December demand. At least Novembernumbers should be good given the many auspicious days formarriage in the month.

But he sounded a bit more optimistic about the tractormarket saying even though he was expecting only around 5percent contraction in volume in the first half, contractionwas much worse at 10 percent and that he personally feels theindustry will be lucky if it closed with a 7-8 percent drop bythe end of March.

However, Goenka said, M&M fared better on the marketshare front despite steep volume fall across the verticals itoperates in as the industry fared much worse than the company.

He also refused to say whether he expects pre-buyingand the resultant pick-up in volumes ahead of the BS-VIintroduction from April, saying for this to happen, firstof all, the oil companies have to announce when they willbegin delivery of the BS-VI fuel and then we OEMs have toannounce the actual price increase on the new models fromApril. These two steps can prompt consumers to decide on theirpurchase decisions.

'So far, the oil companies have just said they will beready to supply BS-VI fuels from the appointed date, no otherdetails. Ideally, the supply should begin at least two monthsbefore. So a lot depends.

'Anyway Mahindra will be rolling out BS-VI vehiclesfrom mid-January and begin to massively scale down productionof BS-IV models from mid-February,' he said.

Financial services vertical posted revenue of Rs2,880.12 crore, up from Rs 2,458.33 crore, while hospitalitysegment reported revenue of Rs 555.37 crore, up from Rs 479.72crore. Revenue from real estate vertical was also up at Rs329.39 crore from Rs 84.55 crore.

The tax expense declined to Rs 403.4 crore from Rs519.4 crore, and chief financial officer VS Parathasarathysaid they have not taken a call on switching to the new lowertax regime even though the manufacturing arm has done so.

After rallying over 2 percent in the run-up to theearnings announcement, the M&M counter closed flat with anegative bias at Rs 580 as against an 81 bps plunge in theSensex, spooked by the macroeconomic worries following thedownward revision in the rating outlook by Moody's. PTI BENIASAP AP