M&M Consolidated Q1 PAT Drops By 52.5%

Mahindra and Mahindra Limited have reported 52.5 percent drop in its consolidated profit after tax (PAT) for Q1 ended June 30, 2019.

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 a 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 the 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 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%.