The country's largest tractor maker - Mahindra & Mahindra along with its subsidiary Mahindra Vehicle Manufacturers Limited (MVML) on Friday reported net profit of Rs. 1,355 crore as against profit of Rs. 1,778.75 crore in the same quarter last year. The profit in the September quarter of 2018, contained an exceptional item of Rs 137.51 crore. After adjusting for exceptional item Mahindra & Mahindra along with MVML's profit declined 18 per cent in the July-September period.
Revenue of M&M and MVML declined 15 per cent year-on-year to Rs 10,935 crore from Rs 12,790 crore. Mahindra & Mahindra's operating profit margin declined by 40 basis points to 14.1 per cent from 14.5 per cent in the same quarteer last year.
Liquidity crunch and high consumer finance rates led to slow demand in the second quarter of current financial year, Mahindra & Mahindra said.
"The Indian economy continues to cope with suppressed consumer sentiment and a continuing liquidity crunch which coupled with the high consumer finance rates due to non-transmission of repo rate reduction is impacting demand," Mahindra & Mahindra said in a press release.
"Despite such a challenging environment leading to a volume drop in both its segments, the Company with strong emphasis on cost management, ensured that the EBITDA drop was in line with the revenue decline. The Company also successfully increased its Market Share in Tractors as well as Passenger Vehicles,"Mhindra & Mahindra added.
As of 2:10 pm, Mahindra & Mahindra shares traded 1.5 per cent higher at Rs 589, outperforming the Nifty which was down 0.3 per cent.
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