MAHINDRA & MAHINDRA LTD = FY 2011 RESULTS & Q4 RESULTS = COST PRESSURES HOLD PROFITS

Mahindra & Mahindra Limited

NSE Symbol        M&M

Mahindra & Mahindra has reported reasonable improvement in its consolidated results for FY 2011 over FY 2010. The consolidated annual results and the Q4 (Stand alone) results are compared below:

Net Sales for FY 2011 is Rs.36117.53 cr – up by 15.86% from FY 10. The Q4 Net sales are Rs.6682.20 cr – up by 10% from Q3 FY 11; up by 25.81% from Q2 FY 11; up by 30.41% from Q1 FY 11; and up by 26.58% from Q4 FY 10. Thus, sales increase in Fy 11 over FY 10 and of Q4 FY 11 over preceding quarters is good.

Total Expenditure for FY 2011 is Rs.31741.32 cr – up by 17.87% from FY 10; which is a more than proportionate increase compared to sales. The Q4 expenditure is Rs.6033.36 cr – up by 13.85% from Q3 (more than proportionate); up by 30.13% from Q2 (more than proportionate); up by 34.61% from Q1 FY 11(similar increase); and up by 32.49% from Q4 FY 10(More than proportionate).

Because of more than proportionate expenditure - Profit from Operations at Rs.5101.04 cr is higher than FY 10 by just 9.93%. The Q4 OPT is Rs.744.81 cr –  down by 9.34% from Q3; down by 6.66% from Q2; up by 9.86% from Q1 and down by 0.8% from Q4 FY 10.

Because of slightly higher OTHER INCOME  over FY 10 – Profit before tax for FY 11 at Rs.4514.87 cr is higher than FY 10 by 12.03%. The Q4  PBT is Rs.808.04 cr – down by 17.85% from Q3; down by 19.74% from Q2; up by 12.05% from Q1 and Up by 5.21% from Q4 FY 10.

Net Profit  at Rs.3197.79 cr is higher than FY 10 by 11.36%. The Q4 NPT at Rs.606.54 cr is down by 17.44% from Q3; down by 20.03% from Q2; up by  7.85% from Q1 and up by 6.36% from Q4 FY 10.

Consolidated Net Profit however is Rs.3079.73 cr – up by 24.25% from FY 10.

Consolidated Basic EPS for FY 11 is Rs.53.46 in FY 2011 compared to Rs.45.08 in FY 2010.

The stand alone Basic EPS for Q4 FY 11 is Rs.10.33; This is Rs.12.59 for Q3; Rs.13.36 for Q2;  Rs.9.94 for q1; and Rs.10.17 for Q4 FY 10.

Thus, the results are reflecting the cost pressures and competitive pressures that the Industry is facing.These pressures are expected to continue in FY 12.

What the company says –

F2011 - M&M Standalone results

The Gross Revenues and other income of Mahindra & Mahindra Ltd. during the year ended 31st March 2011 is Rs.25896.0 crores as against Rs. 20595.5 crores in the previous year – a growth of 25.7%.  The Net Profit before tax for the current year is Rs. 3519.6 crores as against Rs.2846.8 crores in the previous year. After providing for tax the same is Rs. 2662.1 crores against Rs. 2087.8 crores in the previous year - a growth of 27.5%. The growth in the profit of the company despite the relentless increase in material costs is due to a good volume performance by both Vehicles and Tractors, tight control on expenses and prudent financial management resulting in lower interest costs.

In the current year all the products in the company’s UV segment continued to do well. In this segment the company sold a total of 230110 vehicles in F2011 with a market share of 60.9%. In the small 4W load carriage segment, Company’s Maxximo launched in Q4 last year, performed exceedingly well. In the three wheeler and mini four wheeler segment, sales grew by 32.8% in the current year. During F2011 the company exported 17138 vehicles as against 10567 vehicles last year – a growth of 62.2%. SAARC, South Africa & South America are some of the markets where the company’s products sold very well.

For the second consecutive year, the company was the single largest tractor company in the world, by volume, with sales of 214325 tractors against 175196 tractors sold last year - a growth of 22.3%. This includes domestic sales of 202513 tractors against 166359 tractors sold last year. With 42.0% market share in the domestic tractor market, the company celebrated its 28th consecutive year of domestic market leadership. Also the company’s exports during the year grew by 33.7% to 11812 tractors as compared to 8837 tractors exported in the previous year.

Q4 F2011 – M&M Standalone results

The Gross Revenues and Other Income of Mahindra & Mahindra Ltd. for the quarter ended 31st March 2011 is Rs.7391.2 crores as against Rs.5806.7 crores during the corresponding period last year – a growth of 27.3%.  The Net Profit before tax for the quarter is Rs. 808.0 crores as against Rs.768.1 crores in Q4 last year. After providing for tax, the same is Rs. 606.5 crores for the current Q4 as against Rs. 570.3 crores in the same period last year – a growth of 6.4%.

The Board of Directors has recommended a dividend of Rs. 10.5 (210%) per share  and a special dividend of Re. 1 (20%) per share of face value Rs. 5 aggregating Rs. 11.5 (230%) per share which will absorb a sum of Rs. 802.64 crores inclusive of tax (previous year Rs. 9.50 (190%) per share of face value Rs.5.00 each which absorbed an amount of Rs. 623.75 crores inclusive of tax) and will be paid to those shareholders whose names stand registered in the books of the company as on the book closure date. The special dividend is being recommended in view of a special profit of Rs 117.5 crores made by the company on the sale of its entire holdings of Owens Corning India Ltd.

F2011 – Group Consolidated Results

The Gross Revenues and Other Income for the year ended 31st March 2011 grew by  17.5 % to Rs. 39708.7 crores (USD 8.7 billion) from Rs.33790.1 crores (USD 7.4 billion) in last year. The consolidated group profit for the year after exceptional items, prior-period adjustments and tax and after deducting minority interests is Rs.3079.7 crores (USD 677.2 million) as compared to Rs.2478.6 crores (USD 545.0 million) earned in the previous year – a growth of 24.2%. During the year, Satyam Computers Services Ltd (SCSL) – an associate of Company’s Joint Venture Tech Mahindra Ltd (TML), announced its results for the period ended 31st March 2010 and for the year ended 31st March 2011. The results of SCSL, proportionate to the effective holding of the company in it, have been reported as ‘Share of Profit/(Loss) in Associates’.

Excluding exceptional and earlier period items, the consolidated Group profit for the year after tax and after minority interest is Rs 3023.2 crores (USD 664.7 million) as compared Rs 2228.3 crores (USD 490.0 million) – a growth of 35.7%.

During the year, some of the major group companies like Mahindra Finance, Mahindra Lifespace Developers and Mahindra Forgings significantly improved their performance over the previous year. The performance of Mahindra Finance with a 30% growth in consolidated revenues and a 38% increase in profits, and that of Mahindra Lifespace Developers with a 46% growth in consolidated revenues and a 38% profit growth, deserve special mention.

The Group at the end of the year comprised of 110 Subsidiaries, 6 Joint Ventures and 13 Associates. A full summation of Gross Revenues and other income of all the group companies taken together for the whole year F2011 is Rs 56,763.05 crores (USD 12.5 billion).

Outlook:

Indian economy, as per advanced estimates released by the CSO, grew a healthy 8.6% in F2011. However, driven by rising commodity and fuel prices, inflation remained high right through the year leading to a significant hardening in the monetary stance of the RBI. Policy rates were raised seven times in F2011 and the RBI, prioritizing inflation control, increased the Repo and Reverse Repo Rates by a further 50 basis points in May 2011. With both input costs and interest rates rising, the current economic environment is quite clearly challenging. However, the company through its continuous focus on new product introduction, process innovation and cost control, expects to rise to this challenge adequately.

RESULTS TABLE :

M & M	FY 11CS	FY 10 CS	Q4FY11	Q3	Q2	Q1	Q4FY10
Net Sales	3611753	3117235	668220	607446	531126	512417	527886
Total Expenditure	3174132	2692841	603336	529951	463639	448214	455379
Profit from Operations	510104	464013	74481	82158	79797	67796	75084
Other Income	18401	11943	4740	4187	19977	2048	1812
Interest	97421	97983	-1583	-271	-905	-2270	90
Exceptional items	-20403	-25023	-	-11748	-	-	-
Profit before tax	451487	402996	80804	98364	100679	72114	76806
Tax Expense	131708	115420	20150	24896	24830	15875	19780
Net Profit	319779	287149	60654	73468	75849	56239	57026
Consolidated Net Profit	307973	247856
Face Value (in Rs.)	5	5	5	5	5	5	5
Paid-up Equity	29362	28295	29362	29356	28522	28305	28295
Reserves	1397926	989365	-	-	-	-	-
Basic EPS (in Rs.)	53.46	45.08	10.33	12.59	13.36	9.94	10.17
Diluted EPS(in Rs.)	51.29	42.17	9.96	12.28	12.69	9.43	9.57
Public holding (%)	-	-	69.16	71.65	69.13	68.51	68.49

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