Mahindra and Mahindra sees a ₹2,700 crore dent from Ssangyong and other global subsidiaries

Jun 12, 2020, 15:59 IST

India’s third-largest auto maker reported a consolidated net loss of ₹3,255 crore between January and March 2020 compared to a profit of ₹840 crore a year earlier.
If the one-time impact from Ssangyong and other global subsidiaries is taken out, the bottomline would have shown a profit after tax of ₹323 crore.
The stock gained nearly 8% in trade as M&M’s performance far exceeded the estimates, as well as those of its peers like Maruti and Tata Motors.

One of India’s largest automakers Mahindra & Mahindra reported a consolidated net loss of ₹3,255 crore between January and March 2020 compared to the same quarter last year. But it was largely due to a one-time charge for global subsidiaries like Ssangyong.

“The Company has recognised a loss of ₹2,780.47 crore as 'Exceptional items' on account of impairment provision for certain long-term investment,” the statement said.

The profit after tax, before these exceptional items, stood at ₹323 crore, leading the market to cheer⁠— the stock ended the day up over 7.5% ⁠— and the board declared a dividend of ₹2.35 per share of the face value of ₹5 each.

The company’s total revenue was down 35% year-on-year to ₹9,005 crore. The profit was still the worst in at least five quarters.

Better than peers

The Mahindra group company had the benefit of catering to the farm sector at a time when the coronavirus lockdown had brought the urban demand for cars⁠— particularly the more expensive SUVs that M&M specialises in ⁠— to a standstill. The company said the timely relaxation of the lockdown for the agricultural sector helped the company to ensure the gradual recovery of tractor demand during May.

And that’s a reason why it has also been the better of the country’s auto stocks this year.