Hit by GST transition, auto manufacturer Mahindra & Mahindra on Friday reported 19.79 per cent decline in its standalone profit after tax to Rs 765.96 crore for the first quarter of the current fiscal. For the same period last year, the company had recorded a PAT of Rs 954.95 crore.
In a regulatory filing, M&M said that revenue from operations during the first quarter of 2017 -18 stood at Rs 12,335.56 crore, up 3.29 per cent from Rs 11,942.9 crore the year-ago period. The company's vehicle sales were at 1,12,293 units during the first quarter. The company also sold 81,270 tractor units during the period under review.
M&M explained the reasons behind the negative performance and said the automotive industry was impacted due to impending transition to GST. Passenger vehicles sales were adversely impacted in anticipation of a price reduction in the new tax regime and reported a nominal growth of 4.4 per cent, it said.
M&M further said heavy commercial vehicles (goods) segment also showed a decline as a result of pre-buying of BS-III vehicles in Q4 of the previous fiscal. Moreover, saturation of replacement demand coupled with production constraints of BS-IV models led to sales being the lowest in the previous 13 quarters, it added.
On the tractors front, the company said based on a normal monsoon outlook, industry sales continued to post growth in April and May 2017. "However, June 2017 witnessed a decline of 1.7 per cent owing to the uncertainty with regard to transition to GST. Overall, the domestic tractor industry witnessed a growth of 8.5 per cent in Q1. The company however outperformed the industry and grew 13.2 per cent," it said.
M&M said it made a provision of Rs 144 crore to support dealers in respect to duty paid for goods lying with them following transition to GST to overcome unavailability of input credit for certain taxes paid, as well as due to tractors being exempt from excise duty in the earlier regime. Shares of the company were trading at Rs 1,401.15 apiece, down 1.11 per cent, on BSE.
(With inputs from PTI)