Mahindra and Mahindra's bright future prospects were shrugged off today, as the stock turned ex-dividend.

In consequence, the Mahindra & Mahindra (M&M) stock was trading lower by 3.76% to Rs 138.05 by 14:20 IST. The stock of the tractor and utility vehicles maker recorded volumes of over 2.26 lakh shares on BSE by then.

M&M had declared a final dividend of 55% i.e. Rs 5.5 per Rs 10 share for the year ended 31 March 2003. In fact, if yesterday's reference price, after adjusting dividend, of Rs 137.95 is taken into account, the scrip is actually trading higher today.

M&M has been in the limelight for quite some time on hopes of good future prospects as well as on expectations that the tractor sector will look up if the monsoon turns out normal. Between 1 April and 25 June 2003, M&M grew 48% to Rs 143.45 from Rs 97.

M&M has also been boosted by reports that the company is set to make inroads into a number of international markets with its new generation vehicle, the Scorpio. The Scorpio has recently completed its first anniversary on Indian roads. The Scorpio is now set to enter European markets like Italy, Spain, Serbia and Macedonia, where M&M has put in place a distribution channel. M&M is also at an advanced stage to commence operations in markets like the Gulf, West Asia, South Africa, Indonesia, South and Central America and Russia.

Analysts are upbeat about the future of M&M and expect the company to come out with good performances in FY 2003-04, especially in the utility vehicles segment (due to the focus on exports). However, the tractors segment could continue to remain subdued. The tractors segment continues to face problems due to sluggish industry sales. All eyes are now on the monsoon. A good rainfall this year could provide some respite to this division.

At the time of announcing its results for Q4, the company had issued an outlook stating that the healthy trends witnessed in FY 2002-03 are expected to prevail in FY 2003-04. The state of the agricultural economy, however, is not likely to improve significantly in 2003-04.

The recent initiatives taken by the tractor industry to discipline its trade practices will continue to affect overall tractor volumes during 2003-04. The performance of major subsidiaries of the company, though, is encouraging.

For Q4 ended 31 March 2003, the company registered a 48.4% fall in net profit to Rs 48.67 crore (Rs 94.38 crore) on a 23.85% rise in total income to Rs 1,142.48 crore (Rs 922.40 crore). For FY 2002-03, the company recorded a 50% increase in net profit to Rs 145.53 crore (Rs 96.91 crore) on a 15% rise in total income to Rs 3,811.78 crore (Rs 3,320.31 crore.

On a consolidated basis, the group registered a net profit of Rs 216.17 crore on a total income of Rs 5,387.38 crore. The board recommended a dividend of Rs 5.50 per share for the year ended 31 March 2003.

As on 31 March 2003, the promoters holding in M&M was 26.26%, while that of the public and institutions was 15.72% and 43.79%, respectively.