Mahindra and Mahindra (M&M) has declared the results for the year and the three months period ended March 31, 2008.

The utility vehicle and tractor maker has registered a 6.3% fall in its quarterly profit, which stood at Rs 221.1 crore during the quarter ending March 31, as compared to Rs 236 crore during the corresponding period of the last year.

The company said that the recent drop in the quarterly income was mainly due to high input costs.

At a conference at Mumbai, the company predicts a tricky viewpoint for the existing fiscal due to retardation in domestic as well as worldwide economies.

“With domestic economic environment deteriorating significantly in recent months and the US and European economies slowing down, financial year 2008-09 is clearly going to be a challenging one,” the company said.

Operating profit margin for the company decreased to 10.9% in the March quarter from 11.5% in the last year.

However, the company has posted a growth of 15.5% to Rs 3,148 crore in its net sales for the period under review. The company saw a 44.48 per cent growth in sales of SUVs in April with 17,679 vehicles being sold.

Moreover, M&M also increased its market share in the utility vehicle segment from 46.6% to 51.5% in the same period.

Bharat Doshi, M&M's chief financial officer, said, “We cannot assume that we can hold margins at this level because of the tough market conditions.”

The company expects the cost of inputs comprising steel and aluminium to rise by 12% this year.

During the year ended on March 31, 2008, the company registered a growth of 3.3% in its net profit, which stood at Rs 1,103 crore, as against the corresponding period of the previous year. Net sales for the year augmented 14.7% to Rs 11,503 crore.

The yearly operating margin of the company dropped from 12.5% to 11.6%. The company expects further pressure on the margin during the existing year.

The company has earmarked a capital expenditure of Rs 2,000 crore for FY09, which it plans to fund through internal accruals.

The shares of the company, on Wednesday (May 28), lost 0.46% to settle at Rs 641.6 on the Bombay Stock Exchange (BSE).