Auto major Mahindra & Mahindra Ltd. (M&M) and its wholly owned subsidiary Mahindra Vehicle Manufacturers Ltd. (MVML) together reported a 88% drop in second-quarter net profit to ₹162 crore on account of exceptional items.
Exceptional items worth ₹1,149.5 crore ‘represent impairment provisions for certain long-term investments,’ the company said.
The provisions were made towards the company’s investments in its overseas subsidiaries and in Mahindra Finance Ltd., said Anish Shah, deputy MD and CFO.
Mr. Shah said there would be further impairments in the coming two quarters as the company had been closely monitoring the performance of its international subsidiaries with regard to various financial parameters and taking appropriate actions to reduce losses.“There would be no impairment provisions after March 31, 2021 [towards international subsidiaries].”
Recently, the company had announced exit from Gipps Aerospace, its Australian subsidiary, which was into manufacturing of small aircraft as also from Genze which was into assembling of Mahindra tractors.
For the quarter, M&M and MVML reported a 6% growth in revenue to ₹11,590 crore.
The company sold 21% fewer vehicles at 87,332 during the quarter compared with 1,10,824 units. But it’s tractor sales increased 31% to 89,597 units from 68359 units in the same period last year.Exports dropped 33% to 7,103 units as the company focused on increasing supplies in the domestic market.
Pawan Goenka, managing director, M&M said the demand for company’s automobiles and tractors have reached an all-time high in the past two months including October. He said the demand would continue in November and December as well.
“There is huge demand for our products. This is something we have not seen before. There is exceptionable level of demand,” Dr. Goenka said. He said the company has been ramping up production to meet the demand. Production has been impacted by supply constraints which are now reaching normal levels.
For the quarter, the company reported a consolidated net profit of ₹136 crore compared with ₹348 crore in the year-earlier period, down 61%. Revenue and other income declined 1% to ₹23,852 crore.