M&M Q1 consolidated profit falls 94 pc at Rs 55 cr

The company had posted a profit after tax of Rs 894.11 crore in the same period last fiscal, M&M said in a regulatory filing. Revenue from operations during the quarter under review stood at Rs 16,321.34 crore as against Rs 26,041.02 crore in the year-ago period, down 37 per cent, it added.

Homegrown diversified group Mahindra & Mahindra on Friday reported 94 per cent decline in consolidated profit at Rs 54.64 crore for June quarter 2020, adversely impacted by the COVID-19 pandemic. The company had posted a profit after tax of Rs 894.11 crore in the same period last fiscal, M&M said in a regulatory filing.

Revenue from operations during the quarter under review stood at Rs 16,321.34 crore as against Rs 26,041.02 crore in the year-ago period, down 37 per cent, it added. The automotive segment posted a revenue of Rs 6,508.6 crore in the first quarter, down from Rs 13,547.84 crore in the same period a year ago, the company said.

Farm equipment segment's revenue was Rs 4,906.92 crore as against Rs 6,077.9 crore in the same quarter last fiscal. Revenue from financial services stood at Rs 3,031.69 crore as compared to Rs 2,822.03 crore in first quarter last year. Hospitality segment recorded a revenue of Rs 294.26 crore as against Rs 612.49 crore in the same period a year ago, the company added.

The Group's operations and financial results for the quarter have been adversely impacted due to the COVID-19 pandemic and the consequent lockdown, due to which operations were suspended for part of the quarter and gradually resumed with requisite precautions, M&M said. It said its standalone profit after tax for the first quarter was at Rs 112.1 crore as against Rs 2,313.82 crore.

Standalone revenue from operations was Rs 5,602.18 crore as compared to Rs 12,922.72 crore in the year-ago period. "The timely relaxation of the lockdown for the agricultural sector along with positive rural sentiment led to good sales numbers for tractors during the quarter despite the supply chain issues, showing a positive growth rates in May and June 2020," M&M said.

In the first quarter, the domestic auto industry, excluding two- wheelers, reported a de-growth of 81.5 per cent  over the previous year. After the first ever zero sales in April, the industry is finding its way back. The company's key brands which have a strong rural bias saw good demand in June. However, low pipeline inventory coupled with the challenges of ramping up production due to supply chain issues affected sales, M&M noted.

"The company continues its strong focus on cost management to improve its financial performance in these testing times. Its timely decision to raise funds along with good cash generation in the quarter has further strengthened the  cash position," it added. M&M Deputy Managing Director and CFO Anish Shah said the capital expenditure for the current fiscal has been scaled down to Rs 9,000 crore from earlier announced Rs 12,000 crore due to the ongoing market conditions.

He added that the company was evaluating its various international subsidiaries which have been witnessing losses. He, however, said the evaluation would not mean that entire international units will be closed.

"We expect losses from international subsidiaries to come down very significantly as we go from this year to next year," Shah said adding that as part of conserving cash, the automaker has decided not to participate in the US Postal Service tender. "We had been working for last few years for preparing for the bid for USPS, it was a significant investment of about half a billion dollars. Looking at the current environment and from capital allocation point of view, we have decided not to go ahead with this investment," Shah noted.

The company's board on Friday approved an enabling resolution to seek approval of the shareholders to reduce its percentage shareholding in SsangYong Motor Company (SYMC). This is to induct potential investors into SYMC or to otherwise meet the fund requirements of the Korean automaker through sources other than M&M, it added.

The M&M board had decided on April 3, 2020 that the automaker will not make any further investment in SYMC other than USD 32 million to help the Korean firm tide over the immediate fund requirements. PTI MSS RKL ANU ANU.