Mumbai :  Mahindra & Mahindra — India's largest maker of sport-utility vehicles and tractors — saw fourth-quarter profit grow by 36 per cent as economic growth boosted demand for cars.

Net income climbed to Rs5.7 billion, or Rs9.57 a share, in the three months ended in March, from Rs4.18 billion, or Rs5.41, the Mumbai-based company said in a statement today. That beat the Rs4.94 billion average of 16 estimates compiled by Bloomberg.

Sales of Scorpio SUVs and other vehicles rose 40 per cent in the quarter as rising disposable incomes and easing job concerns spurred spending in Asia's third-biggest economy. Mahindra has also bought Renault's stake in a venture, taken control of Reva Electric Car company and drawn up plans to introduce a pickup truck in the US later this year to widen sales.

"The growth in the economy, rising employment opportunities and the easy availability of finance are all helping vehicle sales," said Surjit Singh Arora, a Mumbai-based analyst at Prabhudas Lilladher who rates Mahindra as "accumulate." "Still, margins are likely to take a hit, going forward as costs for raw materials like steel are going up," he said.

Mahindra's spending on materials increased 34 per cent to 31.2 billion rupees in the quarter, while wage costs fell 2.3 percent to 2.66 billion rupees.

The automaker rose 3.3 per cent to 545.95 rupees yesterday in Mumbai. The stock is little changed this year.

Mahindra, last month, purchased Renault's stake in a venture that builds the Logan sedan in a bid to reverse slumping sales. The company took control of Bangalore-based Reva as environmental concerns boosted demand for battery-powered vehicles.

The company's budget for capital expenditure over the three years ending March 2013 will be 45 billion rupees, Uday Phadke, Mahindra's president for finance, legal and financial services, said.

Bid for ssangyong

Mahindra & Mahindra has expressed an interest in bidding for Ssangyong Motors.

Pawan Goenka, president of the Indian company's automotive division, told reporters in Mumbai.

The automaker may submit a financial bid for the South Korean manufacturer of sport-utility vehicles after the due diligence process, he said.

— Bloomberg