Indian Mahindra Q3 Profits - 99 Percent Down

Indian largest SUV and tractor manufacturer worked pro-bono in the third quarter, as the figures of their financial performance showed a 99 percent drop in profits. Net income in the three months ended Dec. 31 dropped to 12 million rupees ($245,000) from 4.05 billion rupees a year earlier, the Mumbai-based company said.  Bloomberg.com reports that this is the lowest quarterly profit margin since 2003, as the report marks the fourth consecutive decline.

Its utility-vehicle sales fell 26 percent in the quarter due to the banks' tightening of credit conditions. The internal market is not the only one to blame as exports fell by 54 percent last quarter due to “recessionary conditions globally.” The company sold a total of 17611 vehicles in January 2009, as against 22309 vehicles sold in January 2008. Mahindra's profit fall got an undesired boost from the lowest currency rate in 17 years. India’s rupee fell 3.5 percent in the three months through December, taking its decline in 2008 to 19 percent.

That was the currency’s worst performance since a balance of payments crisis in 1991 forced the South Asian nation to pawn its gold to pay for imports.The last quarter was extremely challenging for both automobile and tractor industries, the company said in the statement. The “paucity of retail finance, its high cost and lukewarm consumer sentiment in the wake of the global financial turbulence saw volumes decline.”

Cheaper crude oil, slower inflation and the Indian central bank’s measures to make money cheaper and more easily available in the financial system may reduce Mahindra’s costs in the coming months, the company said. Mahindra Group is among the top 10 industrial houses in India and has parternships with both Renault and Navistar.