Q1* Revenue at Rs. 12,997crores
Q1* PAT (before EI) at Rs. 918 crore
Q1* PAT (after EI) at Rs. 2,260 crore
Mumbai, 7th August 2019: The Board of Directors of Mahindra & Mahindra Limited today announced the financial results of the Company for the quarter ended 30th June 2019 and for the consolidated Mahindra Group.
| Q1 F2020 – M&M + MVML Results | Rs. crores | ||
| Q1 F2020 | Q1 F2019 | Growth % YoY | |
| Revenues and Other Income | 12,997 | 13,551 | -4% |
| Profit from ordinary activities Before Tax (before EI) | 918 | 1,238 | -26% |
| Profit from ordinary activities After Tax (before EI) | 2,260 | 1,257 | 80% |
| Operating margin (OPM) | 14.0% | 15.8% | |
| Vehicles sold (Nos) | 1,23,690 | 1,30,484 | -5% |
| Tractors sold (Nos) | 82,013 | 96,527 | -15% |
| Exports (vehicles and tractors) (Nos) | 10,923 | 12,730 | -14% |
For Q1 F2020, the Indian auto industry de-grew 12.3%, with all segments of the industry reporting a decline. It is after six years, that all segments of the industry have posted a reduction in the same quarter. The auto industry excluding 2W fell 15.4% driven by drop of 18.4% in the Passenger Vehicle (PV) industry and the MHCV goods industry falling by 18.6%.
For the PV segment, Q1 F2020 is the fourth consecutive quarter of reduction, the worst ever de-growth since Q3 F2001. PV demand continues to be impacted by the slowing down of the overall economy, which along with tight credit conditions and delayed monsoon has impacted consumer sentiment in both urban and rural India. The stress in the agri sector and finance availability has impacted the demand for LCV 2-3.5T (Pik-UP segment). The HCV goods segment has posted a de-growth of 32.0%, the worst reduction in 23 quarters. The slowing down of economic activity coupled with the increase in freight capacity of existing fleet due to implementation of new axle loading norms has resulted in many transporters either reducing or temporarily suspending their fleet purchase plans.
Tractor demand in Q1 F2020 remained sluggish and was adversely impacted due to a weak sentiment in the agri economy resulting from the delay in SW monsoon, poor spatial distribution in June and weak agricultural incomes impacted by poor price realization. In Q1 F2020, the domestic tractor industry declined by 14.6% with sales of 1,91,305 tractors, against 2,23,937 tractors sold during Q1 F2019. In this period, in the domestic market, the Company sold 82,013 with a market share of 42.9%.
| Q1 F2020 – M&M Standalone Results | Rs. crores | ||
| Q1 F2020 | Q1 F2019 | ||
| Revenues and Other Income | 13,242 | 13,785 | |
| Profit from ordinary activities After Tax (before EI) | 973 | 1200 | |
| Profit from ordinary activities After Tax (after EI) | 2,314 | 1,221 | |
| Q1 F2020 – Group Consolidated Results | Rs. crores | ||
| Q1 F2020 | Q1 F2019 | Growth % YoY | |
| Revenues and Other Income | 26,289 | 26,261 | 0.1% |
| Profit after tax after Non-Controlling Interest (before EI) | 777 | 1,358 | -42.8% |
| Profit after tax after Non-Controlling Interest (after EI) | 914 | 1,707 | -46.5% |
A full summation of Gross Revenue and other income of all the group companies taken together for the quarter ended 30th June 2019 is Rs. 35,970 crores (USD 5.1 billion).
Outlook:
The IMF has pared down its projections yet again for global as well India’s growth in its latest July 2019 outlook. Domestically, data broadly paints a picture of subdued demand, notably in private consumption with firms and households continuing to hold back spending. The RBI has also scaled down the projection of GDP growth for 2019-20 to 7.0% from 7.2% earlier.
Monsoon, which is crucial for farm output and growth, has played catch up lately, thanks to copious July rainfall, after a delayed and patchy start. The India Meteorological Department (IMD) has forecast a zero-deficit monsoon in the second half of season, which bodes well for cumulative rainfall as well as Kharif acreage. The resultant precipitation and soil moisture could also turn out to be positive for Rabi crops.
The RBI has cut policy rates by 75bps thus far and is likely to remain accommodative. The lagged effect of interest rate cuts, liquidity infusion and targeted fiscal spending post budget, especially government actions on improving incomes for farmers, cash transfers and sops for affordable housing, could provide support to growth going forward. However, given the current challenging global and domestic growth environment, a concerted policy effort will be required to prop sentiment, put a floor under consumption and revive growth.
Note: Translation of rupee to dollar is a convenience translation at the average exchange rate for the twelve month period ended 30th June 2019.
