Shares of Mahindra and Mahindra Ltd. were trading with gains of more than two percent despite the company posting a 4 percent drop in its sales for the month of December.
The company saw a 21.8 percent decline for the month of November post the Narendra Modi government's demonetisation drive.
The utility vehicles to farm equipment manufacturer sold 36,363 vehicles as compared to 37,915 vehicles in December 2015, the company said in its filing to the exchanges.
Domestic sales declined 1.5 percent in December to 34,310 vehicles as against 34,839 vehicles in the year ago period.
While the management sees the industry suffering due to the cash crunch in the short-term, it expects demand to return in coming months.
The auto industry continues to go through challenging times, grappling with the short term effects of demonetisation as well as reduced and postponed purchase decisions. However, we believe there will be a gradual pick-up in demand starting next few months. We do hope that the implementation of GST along with some right initiatives taken by the government in the upcoming Union Budget on 1st February, will provide a veritable boost to the auto industry and the economy in general.Pravin Shah, President & CEO - Automotive Business, Mahindra & Mahindra
Exports, which were the lone bright spot for the automaker in November, fell 33 percent in December to 2,056 vehicles compared to 3,076 vehicles year-on-year.
While the sales of passenger vehicles fell 8 percent in December to 16,698 vehicles, the commercial vehicle sales outperformed with a growth of 14 percent to 14,154 vehicles.
Within the commercial vehicle space, the sale of Light Commercial Vehicles (LCV) of less than 3.5 tonnes grew 14 percent to 13,174 units while that of vehicles greater than 3.5 tonnes grew 30 percent to 531 units.
However, the company's Medium and Heavy Commercial Vehicle (MHCV) segment saw a decline of 10 percent in December to 476 vehicles as compared to 528 vehicles.
Three-wheeler sales too fell 17 percent to 3,458 vehicles.
Farm Equipment Business Grows
Brushing aside the impact of demonetisation, the company's farm equipment business grew 9 percent in December to 14,047 units compared to 12,868 units.
While the sale of farm equipment in the domestic market grew 8 percent, exports surged 21 percent to 1,428 units.
The management expects the momentum in the farm equipment business to continue going ahead.
With good progress in Rabi sowing and increased MSPs, we expect to see the growth momentum to continue in the coming months.Rajesh Jejurikar, President And CEO - Farm Equipment And Two Wheeler Division, Mahindra & Mahindra
Shares gained as much as 2.09 percent to Rs 1,209.50 on the National Stock Exchange.
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