Company overview

3M India Ltd (NSE:3MINDIA) is the flagship listed Company of 3M Company, USA in India. 3M Company, USA holds 75% equity stake in the Company and is a diversified technology and science Company with a global presence in the following businesses: Safety and Industrial; Transportation & Electronics; Health Care; and Consumer and is among the leading manufacturers of products for many of the markets it serves. Most of its products involve expertise in technology, product development, manufacturing and marketing, and are subject to competition from products manufactured and sold by other technologically oriented companies.1

The Company has manufacturing facilities in India at Ahmedabad, Bengaluru, Pune and has the Corporate Office and Customer Innovation Center (R&D Center) in Bengaluru. As at March 31, 2020, the Company had employee strength of 1,277 personnel. As on March 31, 2020, the company was ranked 97th based on Market Capitalization @ Rs. 21,20,982 Lakhs and it is now one among the top 100 Companies based on Market Capitalization (Source: NSE). The Company managed its operations in four (4) operating business segments: Safety and Industrial; Transportation & Electronics; Health Care; and Consumer. The Company’s four business segments bring together common or related 3M technologies, enhancing the development of innovative products and services and providing for efficient sharing of business resources.

3M products are sold through numerous distribution channels, including directly to users and through numerous e-commerce and traditional wholesalers, retailers, jobbers, distributors and dealers in a wide variety of trades in many countries around the world. Management believes the confidence of wholesalers, retailers, jobbers, distributors and dealers in 3M and its products — a confidence developed through long association with skilled marketing and sales representatives — has contributed significantly to 3M’s position in the marketplace and to its growth.

The company have wide rage of products covering many industries.

  • Automotive
  • Commerical Solutions
  • Consumer
  • Design & Construction
  • Electronics
  • Energy
  • Health Care
  • Manufacturing
  • Mining, Oil & Gas
  • Safety
  • Transportation

Global Economic Overview

The worldwide economic shutdowns forced by the coronavirus pandemic are expected to cause the worst year the global economy has seen since the Great Depression, according to top economists—raising concerns for the well-being of people in developing nations. the International Monetary Fund (IMF) said the global economy will likely contract by about 3% in 2020 as governments around the world urge people to stay home and shut down businesses to slow the spread of the coronavirus, officially known as COVID-19. The contraction of the economy is expected to be more severe than the recession of 2008 and 2009, when the global economy shrunk by about 0.1%, and represents a major reversal of the IMF’s earlier predictions for this year that the global economy would grow by 3.3% in 2020. 2

The IMF said the economic crisis could stretch into 2021 even if the spread of the virus significantly slows in the coming months, and if there is a resurgence of COVID-19 in the fall or early next year, the economy is not likely to rebound in 2021. The global economy is expected to lose about $9 trillion in 2020 and 2021, according to the IMF’s World Economic Outlook.

India Economic Overview

India’s real GDP decelerated to its lowest in over six years in third quarter in 2019-20 and the outbreak of COVID-19 posted fresh challenges. Steps taken to contain its spread, such as nationwide lockdown in four phases and a complete lockdown of States, have sharply decelerated economic activity and could impact both consumption and investment. While the Indian businesses, barring a few sectors, can possibly insulate themselves from the global supply chain disruption caused by the outbreak due to relatively lower reliance on intermediate imports, their exports to COVID-19 infected nations could take a hit. Overall, the three major contributors to GDP- Private consumption, Investment and External trade have been affected. All indicators point to a very challenging year ahead.

Consumer spending which was already sluggish was hit by COVID-19 related lockdown. All consumption indicators except essentials were severely impacted as economic and medical uncertainty will keep consumption weak for some quarters in FY 2020-21. Inflation moderated to 5.91% as food price tend lower during March 2020. Core inflation is steady at 4.1%. Repo rate was cut by 75 bps in the last policy to 4.44% as RBI tries to mitigate damage from the monetary policy side. Auto Sales was down by 54% in March as COVID-19 roiled the economy. Slow growth in money supply has helped control prices but has hurt GDP growth momentum. Credit slowdown due to delayed capex by India Inc. and has further squeezed growth. In the present scenario, IIP growth, Capital Goods Growth, CV sales, Industry credit is weak. Exports contracted sharply in March as lockdown globally slowed trade. Imports also contracted in line with sluggishness in domestic growth and demand. The impact of COVID-19 will further dampen trade sentiment and keep growth well below trend.

Inflation has eased from its recent highs as food prices moderate and is likely to remain soft in the months ahead. The Current Account Deficit (CAD) and Foreign Exchange (FX) reserves were positive. Fiscal Deficit is expected to rise in the FY 2020 and furthermore sharply in FY 2021 as lockdown and COVID related stimulus and lower tax revenue hit government finances. The Indian Meteorological Department (IMD) has forecasted rainfall over the country as a whole for the 2020 southwest monsoon season from June to September is most likely to be normal and also expects monsoon onset date as June 1, 2020. Normal monsoon forecast bodes well for the upcoming Kharif season. IMF projects India growth at 1.9% for FY21 in its latest reports.

Financial Highlights

It's standalone net loss came in at Rs 39.91 crore during the quarter under review, compared to Rs 84.9 crore profit in the year-ago period. Besides, it reported a pre-tax loss of Rs 54.17 crore, down from Rs 131 crore pre-tax profit reported in Q1FY20. Total income from operation (including other income) stood at Rs 326.6 crore, down from Rs 747.63 crore earned in Q1FY20. 3

"The April-June 2020 quarter was a challenging period owing to the unprecedented situation with broad-based declines in all its end-market segments. While 3M India has seen sequential business improvement in May and June 2020, the outlook for the remainder of this financial year remains uncertain. At the same time, the company continue to make selective investments to drive future growth. The Company is in the process of executing investments in the range of Rs 65 crores for local manufacturing of certain automotive BS-VI compliant emission control materials, as well as capacity expansion for hand-sanitizers and certain disinfectant materials," said Ramesh Ramadurai, Managing Director at 3M India.

On a consolidated basis, it's net loss was Rs 42.52 crore, as against Rs 90.13 crore-profit in the corresponding quarter of the previous fiscal.


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Created by Asif Farooqui on 2020/09/21 18:55
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