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M&M rides smooth in a bumpy year

The financial results of Mahindra and Mahindra Limited declared today, indicates a strong growth both in terms of income and profits for the year ended March 31, 1998.

The company's board of directors, who met in Bombay today, announced an increased dividend of 55 per cent (1996-97, 50 per cent) on a capital base of Rs 1.03 billion. The dividend outgo, including dividend tax, will be Rs 625.4 million.

The company has reported net profit for the year at Rs 2.51 billion, up by 20.13 per cent over Rs 2.09 billion of the previous year.

The income of Rs 41.28 billion for 1997-98 represents an increase of 14.02 per cent over the previous year (1996-97, 36.20 billion). The income net of excise, was Rs 34.88 billion for 1997-98, as against Rs 31.20 billion for the previous year, representing an increase of 11.81 per cent. The gross profit before depreciation, interest, and provision for contingencies of Rs 5.52 billion has gone up by 12.23 per cent (1996-97, Rs 4.92 billion).

Profit before tax is Rs 3.29 billion as against Rs 3.28 billion for the previous year. The provision for tax at Rs 780 million is lower compared to the previous year's provision for tax of Rs 1.19 billion.

Earning per share have also increased to Rs 24.33 from Rs 20.56 for the pervious year.

The Mahindra and Mahindra scrip registered a smart gain of Rs 7.80 to Rs 218.50 against the previous close of Rs 210.70 on the Bombay Stock Exchange while at the National Stock Exchange, the scrip closed higher by Rs 6.90 at Rs 217 against the previous close of Rs 210.10.

Commenting on the company's performance, Managing Director Anand Mahindra said a greater emphasis on widening the product base besides the massive cost reduction exercises helped improve performance. Cost cutting measures were implemented in value-engineering, material cost reduction, operational efficiency control, and strategic sourcing of components at low cost.

He further said that increased volumes have come mainly from rural and semi-urban markets that have consistently been the key thrust areas. "With increased governmental outlays on the agriculture and infrastructure sectors, we expect to see sustained demand for our products which largely cater to the rural markets," he added.

Excellent growth in production and sales marked the performance of the tractor division during the year. The division has established a new record with the production of 71,468 tractors (inclusive of the production at Nagpur) during the year as against 58,028 produced during the previous year -- an increase of 23.16 per cent.

Tractor sales figures grossed 67,780 units as against 57,379 of last year, an increase of 18.12 per cent. With this record increase, the company continues to retain its market leadership for the 15th consecutive year and has increased its market share to 27.1 per cent from 26 per cent of the previous year.

During the year under review, the company produced 77,510 vehicles as against 74,653 vehicles in the previous year, registering a growth of four per cent, and sold 76,954 vehicles as against 75,568 vehicles in the previous year, registering a growth of two per cent for the year in spite of the recession in the industry. The company continues to remain the market leader in the utility vehicle segment with a share of 52 per cent.

The automotive division was able to overcome the slump in the industry as its vehicles enjoy a multi-purpose edge over the competitors. The company introduced as many as seven new models during the year to cater to different niche markets and successfully diversified its customer base.

During the year, 7,077 Ford Escort vehicles were produced for Mahindra Ford India Limited at the company's Nashik facility against 3,981 vehicles during the previous year. The highpoint of the Escort was when it was adjudged the best quality car on the Indian roads by the international firm J D Power and Associates.

The automotive division during the first two months of the current year, sold 9,804 vehicles as against 10,513 vehicles of corresponding period last year. The company improved its market share from 52 per cent for last year to 54 per cent for the first two months of the current year.

The tractor division sold 11,980 tractors during the first two months of the current year as against 12,319 sold in the corresponding period last year. The company's market share shows a significant increase from 27.1 per cent for year ended March 1998 to 30.5 per cent for the first two months of 1997-98.

UNI