M&M's consolidated PAT slips 6 pc to Rs 159.6 cr in Dec quarter

Homegrown farm equipment and utility vehicles major Mahindra & Mahindra Ltd (M&M) on Friday reported a 6 per cent fall in its consolidated profit after tax from continuing and discontinued operations to Rs 159.6 crore for the December 2020 quarter.

The company had posted a consolidated profit after tax from continuing and discontinued operations of Rs 170.69 crore in the corresponding period last fiscal, M&M said in a regulatory filing.

Its consolidated revenue from operations during October-December 2020 stood at Rs 21,625.95 crore, against Rs 19,430.29 crore in the year-ago period, it added.

''In the consolidated financial statement, the loss from operation of SYMC (SsangYong Motor Company), including impairments, aggregating to Rs 1,938.35 crore, and gain on deconsolidation of SYMC as a subsidiary aggregating to Rs 940.03 crore, resulted in a net loss of Rs 998.32 crore, which has been presented as profit/loss from discontinued operations,'' the company said.

Out of this net loss, M&M said Rs 563.84 crore is attributable to the company.

SYMC filed an application before the bankruptcy court for commencement of rehabilitation proceedings on December 21, 2020. It is now preparing and plans to submit a pre-packaged rehabilitation plan (p-plan) with equity investment from an investor and debt from local lenders. There is no increase in M&M exposure as compared to the second quarter of 2020-21, it added.

On a standalone basis, M&M posted a 90 per cent decline in profit after tax at Rs 30.93 crore as against Rs 306.55 crore in the year-ago quarter, the filing said.

Based on the management judgement and best estimate assumptions of the realisation of the realisable value of the assets relating to SYMC, the company said it has recognised an impairment of Rs 1,210.48 crore in the standalone financial results.

Standalone revenue from operations was at Rs 14,215.90 crore as against Rs 12,345.29 crore in the year-ago quarter, it added.

Commenting on the performance of the company in the third quarter, M&M Managing Director and CEO Pawan Goenka said, ''The demand both for the automotive and tractor segment remained very buoyant in this quarter and it was in the last quarter.'' Addressing reporters in a virtual press conference, he said, ''Clearly we don't see any sign of the demand slowing down in the next couple of quarters.'' What has been a bit of a concern is the supply constraint, more so in the automotive industry, not just for Mahindra but for everyone, he added.

In the third quarter, the company's domestic vehicle sales were down 7 per cent at 1,15,272 units as against 1,23,353 units in the year-ago period, it said.

Tractor sales were, however, up 20 per cent at 97,420 units, which is its highest-ever quarterly volume as against 81,435 units in the year-ago period, the company said.

The automotive segment clocked a revenue of Rs 8,606.17 crore during the quarter as against Rs 7,706.73 crore in the year-ago period. The farm equipment division posted a revenue of Rs 6,814.76 crore, compared with Rs 5,456.64 crore a year ago, the company said.

M&M said that during the quarter, capital allocation actions were targeted at loss-making subsidiaries, these actions have made a significant contribution to the financial performance. They include turnaround of businesses, restructuring to achieve profitability and exit from multiple businesses.

In the quarter, the company said its main concerns were supply issues, especially the shortage of semi-conductors impacted availability of ECUs, due to a high dependence on one supplier.

Also, there was a steep increase in commodity prices, partially offset by a sales prices increase and value engineering actions, it added.

Goenka said the two big concerns for the auto industry are the shortage of semi-conductors and rising commodity prices.

On the semiconductor shortage, he said it is a concern not just for Mahindra, and ''that's something we are perplexed with and something where the end is not clearly known as to when this problem will go away.'' M&M Ltd Executive Director (Automotive and Farm Sectors) Rajesh Jejurikar said, ''It is a day-to-day management issue, where there is a lot of uncertainty around what numbers will come in... It looks like given the global nature of the situation, it will be probably around June and July that it would normalise.'' On the outlook, the company said that for the auto sector, with many key indicators showing positive momentum, the calendar year 2021 has started with strong momentum. However, some significant challenges do exist, especially on the supply side and commodity prices.

As for the tractor industry, growth was supported by positive sentiment in rural parts of the country, specifically the agri economy which is driven by good monsoon, healthy reservoir levels, record kharif production, good rabi sowing, it said.

''On the back of these positive factors, it is expected that tractor demand will remain robust during the coming quarter as well,'' M&M said.