Homegrown farm equipment and utility vehicles major Mahindra & Mahindra Ltd (M&M) on Friday reported 6 per cent decline in consolidated profit after tax from continuing and discontinued operations at Rs 159.6 crore for the third quarter ended in December. The company had posted a consolidated profit after tax from continuing and discontinued operations of Rs 170.69 crore in the same period of the last fiscal, M&M said in a regulatory filing.
The consolidated revenue from operations stood at Rs 21,625.95 crore during the quarter under review as against Rs 19,430.29 crore in the corresponding period of the last fiscal, 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 563.84 crore is attributable to the company. SYMC filed an application before the Bankruptcy Court for the 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 financial year 2020-21, it added.
On a standalone basis, M&M posted a 90 percent 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 estimated assumptions of the realisation of the realisable value of the assets relating to SYMC, the company said it had recognised an impairment of Rs 1,210.48 crore in the standalone financial results.
Standalone revenues from operations were at Rs 14,215.90 crore as against Rs 12,345.29 crore in the year-ago quarter, it 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.
However, tractor sales were 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 revenue of Rs 8,606.17 crore during the quarter as against Rs 7,706.73 crore in the year-ago period, while the farm equipment division posted a revenue of Rs 6,814.76 crore as compared to Rs 5,456.64 crore in the same period of the last fiscal, the company said.
M&M said during the quarter capital allocation actions were targeted at loss-making subsidiaries, these actions significantly contributed to the financial performance. They include the turnaround of businesses, restructuring to achieve profitability and exit from multiple businesses. During the quarter, the company said its main concerns were supply issues, especially the shortage of semiconductors impacted the 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.
On the outlook, the company said 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 very good monsoon, healthy reservoir levels, record kharif production, good rabi sowing, continued high central government spending in agriculture and rural development, 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.