M and M net profit falls 85 pc in Q3

The management guided towards a not-so-bright future saying the volumes will close in the red in year to March as the problem of falling demand will linger into the first half of the next fiscal as well. On a full-year basis, volume may clip at 3-5 per cent in FY21 as it expects the first half to be in the red again. But, the management is positive on tractors in FY21 as it expects a 5 per cent volume uptick given the government focus on the rural economy and on expectation of normal monsoon.

Managing Director Pawan Goenka explained bottomline numbers are so bad because of a one-time loss of Rs 554 crore as against a one-time gain of Rs 519 crore in Q3 of FY19.

On the transition to BS-VI, Goenka said already they have begun production of two models and by the end of this month it should be stopping production of BS-IV models provided the supply from the coronavirus-hit China normalises. “As of now there is uncertainty on around 4,000 BS-IV unit, as two key components are sourced from China. But since the outbreak of the epidemics, supply has stopped.

“So, if supply of these two components doesn’t normalise over the next two weeks there is uncertainty, which may force us to move the SC seeking to sell these units after the March 31 as this is caused by force majeure,” he said.