COMPANY HISTORY

Mahindra & Mahindra, one of the major auto makers in India, is the flagship of the Mahindra Group. It was set up in 1945 as Mahindra and Mohammed. The company began assembling complete knock down Jeeps in 1949. The company then stepped in to the manufacturing of agricultural tractors and light commercial vehicles. M&M operates two main units. Its automotive division, the company’s oldest unit founded in 1954, makes jeeps and three wheelers. During the 1964 the company started manufacturing tractors. M&M also manufactures military vehicles. The company also made maiden entry in the passenger car market with the roll out Logan, last year. The company has eight plants located through out India. M&M is having alliance global companies like Renault, Nissan, International truck and Engine Corporation, USA.

Mahindra group today at US $6.7 billion is among the top 10 industrial houses in India. It boasts of one of top tractor brands in the world. Mahindra’s Farm Equipment division has recently won a medal from Japan for the quality of its tractors.  The Group has a leading presence in key sectors of the Indian economy, including the financial services, trade and logistics, automotive components, after-market, information technology, and infrastructure development.

RECENT DEVELOPMENTS

• M&M signed a MOU with Maharashtra Government for the purpose of expanding the capacity of manufacturing plant at Chakan (Pune), at an estimated cost of Rs.1,500 crore.
• The company is planning to acquire 100% stake in Italian Engineering and Design firm to develop better engines.
• The company is all set to enter in the field of aircraft manufacturing under the banner Mahindra Aerospace. The company in partnership with National Aerospace Laboratories (NAL) is going to design and manufacture four seated executive luxury jets.
• The company is planning to enter into the two wheelers segment. The company is on talk with many major two wheeler makers to acquire it.
• Phi advisers firm had acquired 10% stake in the Mahindra and Mahindra’s used car arm First Choice. Now the company is having only 60% and remaining is held by Goldman Sachs, HDFC, Shah & Sanghi.
  

FINANCIALS

The company announced its fourth quarter results recently. The net profit for the quarter ended march 2008 dropped down to Rs.2211 million from Rs.4051.5 million posted in the last quarter ended December 2007. The operating profit of the company for this quarter stood at Rs.3424 million versus Rs.3134.1 million in the same period last year.

The general slow down in the auto sector is due to rising raw material besides fuel prices and increasing cost of financing. Reserve Bank has been taking various measures curb excessive demand in the economy through rate increases and pre empting credit by progressively increasing the cash reserve ratio. Such a scenario is not conducive for auto sector to perform better. The only hope is in the revival of farm sector on top of new loans from banks post write offs and an economy that is likely to settle at a higher farm output prices helped by a near perfect monsoon.

COMPARISON WITH PEERS

 
This table captures the strength of the company that just second to Maruti Suzuki. Another major carmaker Tata motors also didn’t post good results for this quarter. Due to the hike in the price of the raw materials and increase in the crude oil the demand in the consumer market decreased. As the company is planning invade in the manufacturing of two wheelers and also going to roll out new passenger cars, it is expected that the company will post good results in the upcoming quarters.