An employee works inside the Mahindra & Mahindra manufacturing plant in Chakan
Danish Siddiqui / Reuters
Helped by the festive season demand in October, M&M has managed to extend its market share in the tractor segment to 44 percent, its highest ever quarter market share since 2007.
The company sold 72,363 units in the October-December quarter a 20.8 percent jump over the same period last year. This number would have been a lot better but for demonetisation and the consequent lack of cash in the economy affected sales across all vehicle segments in the country.
But the company is confident that the demand would come back soon. Its confidence stems from three factors – area of sowing for the Rabi crop has increased (thankfully the sowing was more or less complete before demonetisation was announced), the minimum support price for oilseeds and pulses have increased by 10 percent and 14 percent respectively and the recent budget has given an enormous thrust to agriculture and rural spending.
The combined effect of these factors and a good monsoon that the country has witnessed should see higher agricultural output and more money in the hands of the people which should translate into better demand for its tractors next year.
The company’s utility vehicle sales took a beating on account of the withdrawal of high denomination notes. It fell by 11.7 percent to 51,772 units. However, the company’s revenues managed a marginal growth of 1.5 percent to Rs 11,778 crore up from Rs 11,607.35 crore in the same period last fiscal. But the profit after tax jumped sharply to Rs 1112 crore, a 32 percent jump from Rs 844 crore it posted in the corresponding period of the previous year.