UTILITY VEHICLES AND PICK-UP TRUCKS POWER SHOW M&M Bucks the Trend, Profit Rises 20% to 726 crore in Q1

Anand Mahindra takes over as chairman as Keshub Mahindra steps down officially

Bucking the industry trend, India's largest utility vehicle maker Mahindra and Mahindra has posted strong double-digit growth in revenues and profitability, driven primarily by robust demand for its utility vehicles and pick-up trucks. The maker of Scorpio and XUV 5OO utility vehicles posted 20% growth in standalone profit after tax for the first quarter ended June 2012 at . 725.6 crore, as compared to . 604.3 crore M&M posted for the same period last year. 

Over 30% volumes growth drove revenues up 35.2% for the April-June 2012 quarter at . 10,115.8 crore, as compared to . 7,318.6 crore it posted for the same period last fiscal. EBIDTA margins dipped 147 basis points for the first quarter, yet were healthy at 11.8%, which is still the best among the four-wheeler players. 
M&M expects the strong momentum to continue in the auto sector with three new product launches lined up in the coming quarter. Its tractor segment, however, continues to slow down. Reflecting on the first quarter earnings, Pawan Goenka, president, automotive and farm equipment sector, Mahindra and Mahindra, told ET: "There is a strong pull for all our products in utility vehicles and pick up truck segment. With three new products (Mini Xylo, Ssangyong Rexton, Reva NXR) in the pipeline, adjusted inventory at the dealers end, we are hoping to sustain this momentum." 
Goenka said the automotive market is likely to grow by a conservative estimate of 6% and at best 10% for this fiscal, but tractor segment growth is likely to grow at a mere 2-3% because of poor monsoon, as against estimates of 7% growth. 
Rikesh Parikh, vice-president, markets strategy and equities, Motilal Oswal Securities, said: "M&M has positively surprised and exceeded our expectations on the top-line and the margins front. There will be some amount of earning upgrade for the full year. Going ahead, volumes will be under pressure, especially in the tractor market, which is showing signs of slowdown. We will keep a close watch on the margins." The earnings announcement came during trading hours on Wednesday and shares of M&M rose 3.92% to . 722.75 a share on Bombay Stock Exchange on a day when the Sensex closed flat. The mood was, however, mixed at Birla Matoshree Auditorium, the venue of 66th Annual General Meeting of Mahindra & Mahindra in Mumbai. 
KESHUB'S LAST AGM AS CHAIRMAN 
At the annual general meeting, soon after the board meeting, Keshub Mahindra, 88, one of India's senior- most business statesman, addressed M&M shareholders for the last time as the chairman of the company. Having been a director for 64 years at M&M and chairman for 48 years, Keshub Mahindra officially resigned from the board. "This is it. I resign as the director and chairman of Mahindra & Mahindra," signed-off the 88-year-old industry veteran in an emotional AGM, which was flocked by the largest gathering of M&M shareholders in recent times. "I hand over the seat to Anand (Mahindra)," said Mahindra senior. In an amazing gesture, Anand Mahindra bowed to touch his feet and sought blessings from his uncle. 
Bharat Doshi, executive director & group CFO of Mahindra & Mahindra, who has been with the company since 1973, said: "This is the moment in history. A very emotional moment. He taught us compassion towards the employees, lessons of ethics and how business decisions are taken, whether it was during the socialist era, postindependence era, marginal liberalisation or globalisation. In the 1990s, M&M survived foreign competition and post-2000, you see how M&M has transformed into a global company. He has been through the whole era." Unlike normal AGMs, shareholders showered Keshub Mahindra, who will now take over as chairman emeritus, with flowers, shawl and gifts as a token of gratitude.

Outgoing M&M chairman Keshub Mahindra with vice-chairman Anand Mahindra at the company's AGM in Mumbai on Wednesday. — Bharat Chanda