NEW DELHI: Mahindra & Mahindra (M&M) on Tuesday reported a 88 per cent drop in its profit after tax to Rs 162 crore for the second quarter ended September 30, mainly on account of the impairment provision of Rs 1,149.46 crore for certain long-term investments.
The auto major along with one unit -- Mahindra Vehicle Manufacturers Ltd (MVML) -- had reported a PAT of Rs 1,355 crore during the July-September period last fiscal.
Revenues of the company, however, increased to Rs 11,590 crore in the second quarter, as against Rs 10,935 crore in the same period previous fiscal, M&M said in a regulatory filing.
The Mumbai-based firm sold 87,332 units in the second quarter, down 21 per cent from 1,10,824 units in the year-ago period.
Tractor sales, however, increased by 31 per cent to 89,597 units in the July-September period as compared to 68,359 units a year ago.
The exceptional items on account of impairments have led to a drop in the profit after tax in the current quarter as compared to the corresponding quarter in the previous year.
The company said an exceptional item of Rs 1,149.46 crore during the September quarter represents impairment provision for certain long-term investments.
On the outlook, the company said with the government spending and rural demand anchoring economic activity, manufacturing and some categories of services have gradually recovered in the second quarter.
Proactive steps from the RBI have kept domestic financial conditions easy and system liquidity in surplus, the company noted.
Besides, Kharif sowing and the recent agricultural reforms portend well for the rural economy, it added.
"However, the turnaround in urban demand may continue to lag, especially the contact-intensive services sectors.
Manufacturing capacity utilisation is expected to recover in the third quarter and activity to gain some traction from the fourth quarter onwards," M&M said.
Capex and exports are likely to remain subdued, it added.
M&M shares were trading 0.15 per cent up at Rs 617.3 apiece on the BSE.