Mahindra & Mahindra (M&M) Q4 00/01 earnings summary

Executive summary

• FY01 was difficult amid a broad economic slowdown and weak rural demand; income eased and profit after tax fell sharply YoY, while leadership in tractors and utility vehicles was maintained.

• Product launches, cost controls, quality and process improvements, customer retention initiatives, and IT investments were used to strengthen competitiveness through the downturn.

Financial highlights

• Income was Rs 435,290 lakh in FY01 versus Rs 440,918 lakh in FY00; net sales and operating income were Rs 353,840.63 lakh versus Rs 356,920.39 lakh.

• Profit before depreciation, interest, contingencies, extraordinary items and tax was Rs 33,726 lakh versus Rs 55,908 lakh; PAT was Rs 12,055.56 lakh versus Rs 26,347.93 lakh.

• FY01 PBT included net extraordinary income of Rs 357.85 lakh from transfers of the Intertrade and MSL businesses.

• Material costs rose with emission compliance, product improvements, added features and model mix; marketing expense also increased, while net interest expense declined.

Outlook and guidance

• Current demand remained sluggish; from 1 April to 27 May 2001, vehicle production and dispatches were 9,390 and 8,881 versus 10,334 and 9,594 a year earlier.

• Tractor production and dispatches in the same period were 6,436 and 6,975 versus 10,579 and 10,941; a normal monsoon was expected to support demand recovery.

• Long-term prospects were viewed positively, supported by low tractor penetration and continuing rural transportation needs, though recovery could be slow.