The Hindu : Business : M&M net up 67 per cent

Online edition of India's National Newspaper
Tuesday, May 30, 2006

Business

Business

M&M net up 67 per cent

Staff Correspondent

Announces Rs. 10 per share dividend

MUMBAI: A strong performance of the farm equipment sector and continuing focus on cost reduction during 2005-06 saw Mahindra & Mahindra (M&M) announce an improved performance with the net profit going up by 67 per cent to Rs. 857.10 crore from Rs. 512.67 crore.

The profit for the year, however, includes exceptional item as a profit of Rs. 167.57 crore (net of tax Rs. 146.50 crore) on sale of shares of the company's subsidiary, Mahindra & Mahindra Financial Services Ltd. (MMFSL), offered as a part of the subsidiary's initial public offering (IPO).

The directors have recommended a dividend of 75 per cent on the enhanced share capital and a special dividend of 25 per cent totalling Rs. 10 per share. The special dividend is being recommended in the light of the successful listing of MMFSL shares on the stock exchanges.

M&M's net sales were Rs. 8,222.70 crore (Rs. 6,660.60 crore), an increase of 23 per cent. The profit before exceptional items and tax was Rs. 889.50 crore (Rs. 700.60 crore), up 27 per cent.

The company's capital expenditure plans for the current year are at around Rs. 650-700 crore (Rs. 300 crore in 2005-06).

The company sold 1.15 lakh utility vehicles (Uvs) (1.11 lakh UVs). In light commercial vehicles (LCVs) with load carrying up to four tonnes, the industry witnessed a drop of seven per cent and M&M brands too saw a decline at 6,777 units (7,887 units). In three-wheelers, M&M sold 18,112 units (22,943 units).

Dr. Pawan Goenka, President, automotive sector, said, the introduction of the passenger vehicle, Logan, was on schedule and would take place in the first half of calendar 2007.

"We are also working on a new platform for the UV range, Ingenio, and the first of these will be launched in 2007-08. With regard to trucks, in our joint venture with International, the first vehicle will be launched in 18 months from now."

In the farm equipment sector, the company's market share grew to 29.7 per cent (26.5 per cent). Tractor exports were up 30 per cent at 6,981 units (5,385 units).

According to Anjani Chaudhari, President, Farm Equipment Sector, the company is now testing tractors under 30 hp made in China through its joint venture, Mahindra-Jiangling.

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