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Mahindra Earmarks Rs 8,600 Crore Capex for Next Five Years

By Motortrend India Staff   |   28 July,2010

Buoyed by a robust 40.30 per cent jump in its net profit for the last quarter, M&M said that it will invest about Rs 8,600 Crore in the next five years for various purposes. The company reported a net profit of Rs 562.39 Crore for the quarter ended June 30 compared to Rs 400.85 Crore in the same quarter last fiscal.

The total income during Q1 increased by 21.63 per cent to Rs 5,160.10 Crore from Rs 4,242.59 Crore in the year-ago period. “We have earmarked around Rs 8,600 crore for the next five years. Out this, Rs 5,600 Crore will be for the Chakan plant,” said M&M President (Automotive and Farm Equipment) Pawan Goenka.

Asked if the company would raise funds for the capex, Goenka said, “We do not have any plan to raise funds. Currently, we have surplus funds of about Rs 2,500 Crore.” On plans for the Chakan facility, M&M Executive Director and Group Chief Financial Officer Bharat Doshi said: “We are setting up a new plant in the next five years at Chakan and the investment will be done in phased manner.”

The company’s current total debt is about Rs 3,000 Crore, including foreign currency. In May, M&M had announced a capex of Rs 4,500 Crore for the next 3 years. The majority of this was earmarked for its Chakan plant, while the rest for products developments.

Commenting on the company’s performance during April-June period of this year, M&M President (Finance, Legal and Financial Services) Uday Phadke said: “Good volumes played a significant role in our results. Also, the ability to control costs resulted in robust bottom-line growths.”

During the quarter, the company sold 53,948 units of utility vehicles compared to 48,720 units, up 10.73 per cent. It also posted 13.73 per cent rise in tractor sales at 47,916 units against 42,130 units same period last year. Phadke said the rising material costs, mainly for tyres, is a matter of concern and it is likely to cause a dent in M&M’s new car sales during this quarter.

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