Mahindra Q2 net falls on softer sales, rupee

By Rina Chandran

MUMBAI (Reuters) - Mahindra & Mahindra Ltd., India's top utility vehicle and tractor maker, reported a worse-than-expected 6.4 percent fall in quarterly net profit, dented by soft tractor sales and a strong rupee.

The disappointing result sent shares in the Mahindra, which derives 5 percent of sales from overseas, down almost 5 percent.

Indian auto makers have faced higher prices of raw materials such as steel and aluminium, while firmer interest rates have slowed demand, particularly for commercial vehicles.

Mahindra said the rupee, which rose nearly 7 percent against the dollar in the quarter, hit its export earnings, but it added that the outlook for the rest of the year remains positive.

The Mumbai-based company, which aims to quadruple exports and double domestic sales by 2010, with four new platforms and 10 new product launches, is reported to be bidding for Ford Motor Co.'s premium Jaguar and Land Rover brands.

The company has declined to comment on the reports.

Mahindra, which makes the Logan sedan in a joint venture with France's Renault, said net profit fell to 1.91 billion rupees ($47 million) in the April-June first quarter from 2.04 billion rupees a year ago.

Net sales rose to 26.13 billion rupees from 22.36 billion.