Mumbai: India's top tractor and utility vehicle maker, Mahindra & Mahindra Ltd, on Monday posted lower-than-expected quarterly earnings adjusted for one-time gains, as raw materials costs climbed.
Auto firms have enjoyed robust sales on rising incomes and cheap loans in Asia's third-largest economy, but sales growth had eased in the year to March 2006 on a cyclical slowdown, higher fuel prices and firmer interest rates.
Mahindra said net profit more than doubled to Rs 321 crore for the fiscal fourth-quarter to end-March, thanks to one-time gain of Rs 168 crore from sale of shares in Mahindra & Mahindra Financial Services Ltd.
Excluding the gain, earnings were flat at Rs 153 crore versus a year-earlier period, and lagged a median forecast of Rs 187 crore in a Reuters poll of 12 brokerages.
Mahindra, which has about 30 per cent of India's tractor market, the world's biggest by volume, said raw materials expenses rose 14 per cent to Rs 1467 crore, from Rs 1287 crore a year earlier.
Net sales rose 17.7 per cent to Rs 2249.2 crore, from Rs 1910 crore a year ago. Formed in 1945 to make Chrysler Jeeps in India, Mahindra has nearly half of India's utility vehicle market and 30 per cent of its tractor market.
The world's number-four tractor maker, Mahindra aims to be at the top in five years. Mahindra has an $80-million joint venture with Navistar Inc's International Truck and Engine Corp to make 50,000 medium and heavy trucks a year from 2007.
It will also make Logan sedans with France's Renault from 2007. Shares in Mahindra, valued at $3 billion, had risen 26 percent in Jan-March, beating a 25 per cent gain for the sector index and a 20 percent rise on the benchmark index.
Mahindra sold 65,393 vehicles and tractors in Jan-March, up 9 per cent from a year ago, lagging market growth of 11 per cent. Leader Tata Motors Ltd earlier this month reported a lower-than-expected 17 per cent rise in quarterly profit to Rs 458 crore.
Mahindra is investing Rs 100 crore to expand capacity at its plant in Nashik to 570 vehicles a day from 330. It is also stepping up production of its popular Scorpio utility vehicle to 180 units per day from 132.
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