The Board of Directors of Mahindra and Mahindra Limited today announced the unaudited financial results of the company for the second quarter ended 30th September 2008.

During the quarter, Gross Revenues of the Company grew by 14.1% and Net Profit after tax excluding exchange loss and other exceptional and special items by 9.3%. The details are as follows:

Q2 F2009 – M&M Standalone results

The Gross Revenues and Other Income of Mahindra & Mahindra Ltd. for the quarter ended 30th September 2008 is Rs.3695.2 crores as against Rs.3239.5 crores during the corresponding period last year – a growth of 14.1%. The Net Profit from ordinary activities after tax for the quarter is Rs.185.7 crores as against Rs.285.9 crores last year. The lower profits are mainly on account of an exchange loss of Rs.117.8 crores (Rs.77.8 crores net of tax) suffered by the company due to Rupee depreciation. The exchange loss includes a notional loss of Rs 96.7 crores on account of the revaluation of the company’s net foreign currency borrowings which loss is likely to reverse should rupee appreciate before the borrowings become due for repayment. Also in Q2 current year the non-recurring Octroi refund was only Rs 27.0 crores (Rs 17.8 crores net of tax) as against a refund of Rs 92.9 crores (Rs 61.3 crores net of tax) in Q2 F2008. Both the Automotive and Farm Equipment sectors of the company had a good sales performance during the quarter. However the runaway increase in the material costs in a highly turbulent economic environment which saw a precipitous fall in the value of Indian Rupee and a steep climb in the interest rates exerted considerable pressure on our operating margins and profits.

Excluding the impact of the exchange loss and other special/ exceptional items, profit after tax during the quarter was Rs 237.8 crores as against Rs 217.4 crores in Q2 last year – a Growth of 9.3%.

During the quarter the company transferred its logistics business to a wholly owned subsidiary with effect from 1st Apr 2008 and merged with itself one of its wholly owned subsidiaries with effect from 1st Feb 2008. The financial impact of these transactions has been reported as special adjustments after ascertaining profit after tax from ordinary activities for the quarter.

H1 F2009 - M&M Standalone results

The Gross Revenues and other income of Mahindra & Mahindra Ltd. during the half-year ended 30th September 2008 is Rs 7367.5 crores as against Rs 6212.4 crores in the corresponding period last year – a Growth of 18.6%. The Net Profit from ordinary activities after tax for the half-year is Rs. 355.2 crores as against Rs.477.1 crores last year. Excluding the impact of the exchange loss and other special/ exceptional items, the profit after tax during the current half-year is Rs 458.7 crores against Rs 412.7 crores in H1 last year – a Growth of 11.2%.

The results pertaining to an earlier period arising from the merger of the wholly owned subsidiary recognized in the half-year period have again been reported as special adjustments after ascertaining profit after tax from ordinary activities for the half-year.

Q2 F2009 – Group Consolidated Results

The Gross Revenues and Other Income for the quarter ended 30th September 2008 grew by 19.1% to Rs.7741.4 crores (USD 1.7 billion) from Rs.6502.6 crores (USD 1.4 billion) in Q2 last year. The profit before exceptional items and tax for the quarter is Rs.623.0 crores (USD 132.9 million) as compared to Rs.694.5 crores (USD 148.2 million) in Q2 of F2008. During the period there was also an exceptional profit of Rs.33.1 cores that accrued to the group out of the private placement of shares by group subsidiaries, Mahindra Retail Pvt Ltd and Mahindra Residential Developers Ltd. The Consolidated profit after tax for Q2 after deducting minority interests is Rs.373.3 crores (USD 79.7 million) as against Rs.392.6 crores (USD 83.8 million) earned in Q2 previous year.

H1 F2009 – Group Consolidated Results

The Gross Revenues and Other Income for the half year ended 30th September 2008 grew by 23.8% to Rs.15298.7 crores (USD 3.3 billion) from Rs.12360.8 crores (USD 2.6 billion) in H1 last year. The profit before exceptional items and tax for the current year is Rs.1286.4 crores (USD 274.5 million) as compared to Rs.1228.6 crores (USD 262.1 million) in H1 F2008. During the period there was also an exceptional profit of Rs.64.2 cores that accrued to the group out of the private placement of shares by group subsidiaries, Mahindra First Choice Wheels Ltd, Mahindra Retail Pvt Ltd and Mahindra Residential Developers Ltd. The Consolidated profit after tax for H1 after deducting minority interests is Rs.782.9 crores (USD 167.0 million) as against Rs.692.2 crores (USD 147.7 million) earned in H1 previous year – a growth of 13.1%.

Automotive Sector:

The Company’s domestic MUV sales volumes grew 8.9%, against the industry sales growth of 5.1%. A total of 38462 MUVs were sold by the company in Q2 F2009 as against the sale of 35309 MUVs in Q2 previous year. The company strengthened its domination of the domestic MUV segment by increasing its market share to 54.3% in Q2 F09 over 52.4% in Q2 last year. In September 2008 the company launched the Scorpio Automatic which offers a great combination of automatic transmission and peppy diesel engine further enhancing the joy of effortless driving.

In the pick up segment, the Company’s volumes registered a growth of 20.2% in Q2 F2009 while the industry growth was only 11.8%. The Company’s market share stood at 86.4% in Q2 F2009 as against 80.4% in Q2 last year.

In the three wheeler (large and small) market, during the current quarter, the company’s sales volumes, against the flat Industry volumes, grew by 57.2% to 14335 nos. The company’s market share grew to 14.5% from 9.3% in Q2 F2008.

The Company continued its strong focus on exports. Various initiatives taken in the previous years resulted in the company exporting 2941vehicles in Q2 F2009, which is a 6.6% growth over exports in Q2 last year.

Farm Equipment Sector:

During the quarter, domestic tractor industry sales volumes grew by 7.5% to 73208 nos. against 68111 nos. in Q2 last year. The company sold 21090 tractors in the quarter as against 20633 nos. in Q2 last year – a growth of 2.7%. The company continued to be the market leader with a market share of 28.9% during the quarter. Exports during the quarter were 2102 tractors as compared to 1651 tractors exported in Q2 last year - a growth of 27.3%.

Engine business continued to show healthy revenue growth. For Q2 F2009 the revenue grew by 101% to Rs. 226.1 Crs against Rs. 112.5 Crs for Q2 F2008.

Group Companies:

The Group comprised of 95 subsidiaries, 4 Joint Ventures and 11 Associates as on 30th September 2008. In the current quarter the major group companies like Punjab Tractors, Tech Mahindra, and Mahindra Holidays, had a significantly improved performance over the previous year. The performance of Punjab Tractors with a 178% growth in profits and of Tech Mahindra with a 67% profit growth, deserve special mention.

Outlook:

Inflationary pressures in the Indian Economy are moderating but with the ongoing financial crises all over the world, growth prospects are being impacted and uncertainties continue. The FIIs have reduced their exposure to India thereby adding to the already existing domestic liquidity problem and bringing pressure on the value of the rupee. While, RBI has taken some positive steps in the last fortnight by cutting CRR and reducing the Repo Rate, the vulnerability of the Rupee remains a concern. In spite of global uncertainties, the forecast growth of 7 to 7.5% in India remains sustainable and there is a healthy demand for the company’s products. Your company will continue to focus on cost controls, process efficiencies and product innovations to meet customer expectations and looks to the future with confidence.

Note: Translation of INR to USD is a convenience translation done at the exchange rate prevailing on 30th Sept 2008.

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