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Keshub Mahindra’s Speech at Mahindra & Mahindra’s 62nd Annual General Meeting held in Mumbai
Ladies and Gentlemen, During the year under review, we have received many accolades for our practices of governance as well as a dedicated pursuit of our corporate social responsibility which focuses on education, health and environment. All these have been dealt with at length in the Reports in your hands. I will therefore not subject you to further repetition. I do want to make a special reference of the 14,000 odd employees who have spent time during the year doing some sort of social service under our Employee Social Option Plan (ESOP). I am grateful to them for their interest and participation. I am not going to highlight for you the performance of last year for these are with you in ample detail. At our Board Meeting this morning, your Directors approved the Company’s quarterly results. The Auto Sector outperformed the Industry in its core UV business, sale of Company’s Utility Vehicles witnessed a growth of 21.6% as compared to an Industry growth of 17.4%. The Company sold 37,919 MUVs in the first quarter as against 31,171 MUVs in the same quarter last year. The Company strengthened its leadership in the domestic UV market with a market share of 51.8% (compared to 50%) in the same period last year. Sale of company’s tractors in the domestic market grew by 11.5% to 28,161 tractors in the first quarter as compared to 25,250 tractors in the same period last year. I will now give you the figures for the first quarter ended 30th June 2008. Gross revenues and other income of the Company is Rs.3749.2 crores as against Rs.2972.8 crores during the corresponding period last year showing a robust growth of 26.1%. Before making provision for an exchange loss (77.9 crores) which was caused by the appreciation of the dollar against the rupee relating to the FCCBs of $ 200 million issued in April, 2006 and also due to other forex borrowings and liabilities, the net profit this quarter would have been Rs.217.47 crores as against Rs.195.81 crores of the corresponding quarter last year. After making a provision of Rs.77.9 crores the net profit for the quarter is Rs.159.3 crores as against Rs.191.2 crores last year. Although there was a satisfactory growth in the revenue, the profits were also affected by the sharp increase in input costs including the galloping price of oil and commodities all over the world. To meet the challenges of rising energy costs, we already have several of our models available in CNG versions. We have ushered in three-wheeler electric vehicles and are currently developing
These include a younger. In 1984. brought the concept of personalized transport to India with the launch of the moped Luna in 1974. electric start on scooters and motorcycles. we have already demonstrated a hydrogen fuelled three-wheeler this January. it launched India’s first gearless scooter which has come to symbolize comfort. At the Board Meeting held earlier this morning. helping it to establish a robust. v-twin engines. You will recollect that your Company acquired 63. value engineered motorcycles and high-end motorcycles for the Indian and global markets. USD forks. We are strongly positioned to cater to this demand. have grown from 3 million in the Financial Year 1998 to 7. convenience and universal appeal. We have several projects in progress jointly with other organizations including the Government of India. Founded in 1974.2 million in the Financial Year 2008. Comet and Aquila. scooters will form our entry point into the Indian market and will be an important part of the company’s overall two-wheeler product portfolio.64% Valuation of the shares of both the Companies was done by independent valuers . more affluent customer base with a significant number of empowered women and increased scooter demand in tier-2 cities and small towns. your Directors have recommended the merger of Punjab Tractors into your Company. We have already validated some of our tractors to work on Bio-diesel and we have a pilot of 10 Scorpios running on B-100 fuel – our efforts will be to accelerate our Research & Development in the area of alternate fuels to meet the challenges of rising prices of oil. It is also the only company to offer top-end world class bikes. which comprise 93% of total two-wheeler sales. The penetration level is.2%. etc. The company has a rich history of innovation and has introduced several new concepts that have revolutionized the twowheeler industry.31% held by the Company’s subsidiary Mahindra Holdings & Finance takes our total shareholding in the Punjab Tractors to 64. a CAGR of 9. Kinetic. Your Company will acquire an 80% stake in the SPV for an approximate sum of Rs. still low at 48 vehicles per thousand of population which augurs well for the future growth of the industry.33% stake of PTL through a negotiated deal and a subsequent open offer. however. This investment will be made through a special purpose vehicle (SPV). This together with 1. the Kinetic Group has sold over 6 million vehicles in India. your Board of Directors have approved the acquisition of business assets of Pune-based Kinetic Motor Company Ltd.electric options for several other models. Our Scorpio hybrid programme is well known and we have interest in the hydrogen combustion engine. (KMCL). At a meeting this morning. Domestic sales. we believe that electric vehicles will have better acceptance and affordability in the future. The two-wheeler industry has grown from 3 million in the Financial Year 1998 to 8 million in the Financial Year 2008. The deal will enable us to design and market a range of scooters. With better battery technology. in fact. There are several macro environmental trends which make the scooter market especially attractive. Kinetic has also introduced new technologies to India including four valve engines. Within the overall two-wheeler strategy.110 crores subject to closing due diligence. given the company’s significant presence and brand equity in these markets. end-to-end two-wheeler business in every segment of the industry. India is the second largest producer of two-wheelers in the world. to Indian bike enthusiasts.
as also the disarray in the financial markets. challenging and a difficult year. It is obvious that there should be a consolidation of our tractor business as that would bring overall operational efficiencies. but not necessarily a bad one. Swaraj brand is very powerful brand and we will continue to sell the products made by this Division under that brand. a well dispersed monsoon will bring about a good agricultural growth and that the Services sector continues to be robust. and pursuing efficiencies all around. Many of these issues are beyond the control of your Company but the impact of many of these constraints will be lessened through strict cost controls. We do hope that subject to rains. Directors of PTL as well as Mahindras at a Board Meeting this morning have recommended this merger proposal to the shareholders. with forecasts for the next few months difficult to make. let me end with a word of caution for the current year. It is our intention to operate the Punjab Tractors Limited business as (Swaraj Division of our Farm Equipment Sector) and it will be headed by a separate CEO who will report to the President of FES. governance. In due course more details of these proposals will be in your hands for it requires not only the approval of the shareholders of the two Companies but also the approval of the two High Courts in Mumbai and Punjab. and the overall business performance. This will also bring about better utilization of resources. We are all aware of the economic conditions prevailing in the US. While your Company has performed satisfactorily on three major counts. innovation. CSR. achieve overall cost reduction and use each others synergies in management. While Government will attempt to find the right balance between containing inflation and achieving growth. Our economy is no longer insulated or isolated from world events with the result that we are facing double digit inflation and it is expected that interest rates will remain high. the rising cost of energy and the price of oil hovering around 130/140 dollars per barrel and the prices of commodities have gone through the roof.and they have recommended the merger on the basis of 3 shares of PTL for 1 share of M&M. . We face a turbulent. we see a year of economic turbulence.
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