Automobile firm Mahindra & Mahindra (M&M) took a hit of about Rs 144 crore on account of the Goods and Services Tax (GST) for the June 2017 quarter (Q1), resulting in both sales and net profit coming lower, according to regulatory filings on Friday.
The company's stand-alone net profit dropped 19.7 percent to Rs 766 crore in Q1 from Rs 955 crore in the corresponding period last year while sales dipped three percent to Rs 12,335 crore.
Also read: Car sales show mixed trend in July 2017
"Due to the unavailability of input credit for certain taxes paid, as well as due to tractors being exempt from excise duty in the earlier regime, the company to ensure minimum impact for customers, has made provision for dealer support in respect of duty paid goods lying with dealers amounting to Rs 144 crore," the company said in the regulatory filing.
The share price of M&M closed almost flat at Rs 1,418 on the BSE.
Tractor sales grew 13.2 percent while cars and commercial vehicles volumes had a modest 4.4 percent due to multiple factors. "The automotive industry in Q1 F2018 was impacted due to the impending transition to GST from 1st July 2017 with the Passenger Vehicles sales being adversely impacted in anticipation of a price reduction due to GST and reporting a nominal growth of 4.4%. The sales of Heavy Commercial Vehicle goods segment showed a dip as a result of pre-buying of BS3 vehicles in Q4 F2017, saturation of replacement demand and production constraints of BS4 models leading to Q1 F2018 sales being the lowest in past 13 quarters," the company said.