M&M’s Profit Falls The Most In Two Years

Mahindra & Mahindra Ltd.'s net profit declined the most in over two years as passenger vehicle sales fell ahead of the implementation of the Goods and Services Tax regime.

The bottomline in the April to June quarter stood at Rs 766 crore, a fall of 19.7 percent compared to the corresponding quarter last year, according to the company's exchange filing. The consensus estimate of analysts tracked by Bloomberg stood at Rs 851 crore. The company provided Rs 144 crore to compensate dealers for a change in levies after under the GST.

Passenger vehicle sales were adversely impacted in anticipation of a price reduction due to GST, the automaker said in the filing. Commercial vehicle sales dipped due to pre-buying of Bharat Stage-III emission norms compliant vehicles in the previous quarter, and production constraints of BS-IV models, the company added.

Revenue rose 3.2 percent to Rs 12,335.6 crore, surpassing the consensus estimate of Rs 11,266 crore.

Earnings before interest, tax, depreciation and amortisation declined 2 percent to Rs 1,267 crore, while the margin contracted 80 basis points to 10.9 percent.

Segment-Wise Performance

• Automotive revenue fell 2 percent at Rs 7,682 crore.
• Farm equipment revenue rose 13 percent Rs 4,321 crore.

The Meteorological Department's forecast of normal monsoons pushed up tractor sales in April and May, according to the company. Sales fell in June, due to the uncertainty regarding the transition to the GST regime.

Speaking to reports at the company's annual general meeting Anand Mahindra, chairman of the Mahindra Group said, the company will invest $1 billion over the next five years in North America.

Here are the highlights from Mahindra's speech:

• FY17 witnessed astounding changes in the industry
• Sales have risen after knockdown in the early stages
• Believe future will be shaped by anticipating changes
• Witness big tectonic shift happening in the auto industry
• Automobile industry has increased focus on clean energy
• Company has several feasible models for electric vehicles (EVs) and will lead the change in the segment

• Company chooses to invest in the ride sharing space, which will allow will allow multiple players to compete and co-exist successfully
• Trump's goal of making America great again will make the U.S. an investment friendly place
• Will invest $1 billion in next 5 years in North America