On Friday, Mahindra & Mahindra reported a net loss of Rs 3,255 crore combined with that of Mahindra Vehicle Manufacturers (MVML) for the March ended quarter. In comparison, the firm posted a net profit of Rs 969 crore in the corresponding quarter last year.

Mahindra & Mahindra (M&M) reported a net loss of Rs 3,255 crore in Q4 March 2020 compared with net profit of Rs 969 crore in Q4 March 2019.

The results include the combined earnings of M&M and Mahindra Vehicle Manufacturers (MVML), which is a manufacturing unit of M&M.

The company reported a pre-tax loss of Rs 2,687.72 crore in the fourth quarter. It had recorded a pre-tax profit of Rs 1,410.34 in the same period last year. The operating margin (OPM) improved to 13.6% in Q4 FY20 from 13.5% in Q4 FY19. The company’s profitability was impacted due to one-time loss of Rs 3,577.64 crore in Q4 FY20.

While the total vehicle sales were down by 47% to 86,351 units, tractor sales rose marginally (by 0.5%) to 57,164 units in Q4 March 2020 over Q4 March 2019. Total exports (vehicles and tractors) during the March quarter tumbled 57% year-on-year (YoY) to 5,783 units.

The company said earnings were impacted due to the lower industry volumes in both automotive and tractor segments, transition to BS VI and the abrupt lockdown due to the COVID situation. The company, however, increased its market share in the domestic tractor market to 39.1% in Q4 FY20, a growth of 3.7% over corresponding quarter previous year and continued to maintain its operating margin.

“As announced earlier Mahindra board had decided not to infuse any fresh capital into Ssangyong and is re-examining the business outlook of other International subsidiaries, in view of the current environment, to decide on future capital allocation, M&M said in a statement.

In its outlook, the automaker said that the lock downs to contain the spread of the corona virus have curtailed both supply and demand. Added to this, a combination of lower incomes and heightened uncertainty has added to the drag on consumer spending and business investment.

“As restrictions ease, and the economy at large, adapts to operating and living in a post-Covid era, it is expected that there will be a gradual recovery in the second half of the fiscal. There will be a ramp up in production, supply chain and distribution from June on wards, which will aid economic activity.

While the overall services and manufacturing sectors are likely to see a slower recovery, the agriculture/farm equipment sector will be relatively less impacted, aided by several positive factors such as record Rabi production, higher Government procurement, timely announcement of higher MSPs and outlook of a normal monsoon. One can expect a quicker recovery in rural India, as is evidend from tractor sales of the company in the month of May.

The urban segment may take longer to come back to normalcy. Having said that, while the outlook is heavily contingent upon the intensity, duration and spread of the pandemic, a smooth normalization and efficacy of policy measures will be the key to any recovery in FY21,” M&M added.

Shares of M&M rose 3.16% to Rs 489.45 on the BSE. It traded in the range of Rs 457 and Rs 493.15 so far during the day.

Mahindra & Mahindra’s business is diversified across farm equipment, auto and automotive components, real estate, hospitality, information technology, defence and aerospace and financial services.