Mahindra Holidays and Resorts India reported a 94% plunge in third-quarter profit on Thursday, dragged by a one-time charge following the roll-out of India’s new labour codes and slower membership growth.
The company’s consolidated net profit dropped to 22.3 million rupees ($242,697.84) for the quarter ended December 31, from 348.4 million rupees last year.
Shares were down 1.3% before the results and extended losses to fall about 3% after the announcement.
A one-time charge of 110.62 million rupees, linked to India’s new labour codes, weighed on the company’s quarterly profit.
India’s new labour codes – the country’s biggest overhaul of workers’ laws in decades – have dragged profits of large corporates, including those of Godrej Consumer Products, Wipro and Infosys.
The company offers resorts and sightseeing packages through its Club Mahindra membership and generates revenue through member fees. The pace of member addition slowed to 1,493 new members from 3,000 last year, with total memberships in the quarter standing at more than 3.04 lakhs.
Total revenue rose 11% to 7.53 billion rupees in the quarter, as compared to 6.78 billion rupees, a year ago. The company’s European operations took a hit from economic pressure and adverse weather conditions in Finland, which in turn had a negative impact on profitability, the company said in a press release.
($1 = 91.8838 Indian rupees)