Capitaline

Results 30-Jul-22

Analysis

Singer India

Strong sales growth on low base, OPM remains low

Net sales (including other operating income) of Singer India has increased 49.47% to Rs 109.53 crore. Sales of Sewing Machine segment has gone up 45.26% to Rs 74.14 crore (accounting for 67.69% of total sales). Sales of Domestic Appliances segment has gone up 59.13% to Rs 35.39 crore (accounting for 32.31% of total sales). Profit before interest, tax and other unallocable items (PBIT) have jumped 50.38% to Rs 6.00 crore. PBIT of Sewing Machine segment rose 29.69% to Rs 7.12 crore (accounting for 118.67% of total PBIT). PBIT of Domestic Appliances segment rose 25.33% to negative Rs -1.12 crore (accounting for -18.67% of total PBIT).

PBIT margin of Sewing Machine segment fell from 10.76% to 9.60%. PBIT margin of Domestic Appliances segment rose from negative 6.74% to negative 3.16%. Overall PBIT margin rose from 5.44% to 5.48%.

Operating profit margin (OPM) has turned from negative 0.81% to positive 0.93%, Operating profit for the quarter stood at Rs 1.02 crore compared to loss of Rs 0.59 crore. Raw material cost as a % of total sales (net of stock adjustments) decreased from 4.98% to 3.78%. Purchase of finished goods cost rose from 67.76% to 75.74%. Employee cost decreased from 9.92% to 5.73%. Other expenses fell from 18.27% to 13.92%.

Other income fell 53.80% to Rs 0.85 crore. PBIDT rose 49.60% to Rs 1.87 crore. Provision for interest fell 50% to Rs 0.09 crore.

PBDT rose 66.36% to Rs 1.78 crore. Provision for depreciation down 27.54% to Rs 0.5 crore.

Profit before tax grew 236.84% to Rs 1.28 crore. Provision for tax was expense of Rs 0.32 crore, compared to Rs 0.1 crore. Effective tax rate was 25.00% compared to 26.32%. Profit after tax rose 242.86% to Rs 0.96 crore.

Promoters’ stake was 57.65% as of 30 June 2022, compared to 58.99% as of 30 June 2021.

Despite this growth, the high inflation and volatility in the raw material prices lead to price instability which impacted the consumer demand mainly in the home appliances sector. In addition, the expected correction in the prices of raw material anticipated at the end of the quarter also led to destocking by many channel partners causing lower primary sales by the Company in both sewing machines and home appliances.

Gross margins were sustained despite the high commodity prices. The spend on advertising and sales promotion increased during the Q1FY23 as compared to QIFY22the lower spent last year due to covid related issues.

The Company continued to operate with zero borrowings despite increase in the inventory levels at the end of June 2022. The inventory had increased partly due to lower sales than forecast and partly due to preparedness for the approaching festival season.

The Company has sold its idle leasehold land and building located in Jammu for Rs 10.4 crore and the surrender of leasehold rights of land formalities were completed on 13 July 2022. The profit before tax of Rs 7.2 crore will be recorded in the quarter ended September 2022.

Rajeev Bajaj, Managing Director commented that “The drop in commodity prices is expected to have a positive impact on sales and margins in the coming months. Whilst the company remains cautious in light of the continued possibility of recessionary conditions, the outlook remains positive and the company is in a strong position to weather any economic turbulence. Our entire team is working very hard to deliver the expectations of our esteemed Shareholders”.

Financial performance FY2022

Net sales (including other operating income) of Singer India has increased 9.28% to Rs 452.98 crore in FY2022. Operating profit margin has declined from 4.36% to 2.19%, leading to 45.18% decline in operating profit to Rs 9.90 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 2.12% to 2.71%. Purchase of finished goods cost fell from 74.63% to 74.59%. Employee cost increased from 5.70% to 6.33%. Other expenses rose from 13.25% to 14.15%.

Other income up 1.81% to Rs 2.82 crore. PBIDT fell 38.93% to Rs 12.72 crore. Provision for interest fell 53.66% to Rs 0.76 crore.

PBDT fell 37.68% to Rs 11.96 crore. Provision for depreciation eased 26.45% to Rs 2.28 crore. Profit before tax dipped 39.84% to Rs 9.68 crore. Provision for tax was expense of Rs 2 crore, compared to Rs 5.47 crore. Effective tax rate was 20.66% compared to 34.00%.

Profit after tax declined 27.68% to Rs 7.68 crore.

Singer India: Standalone Results
	2206 (3)	2106 (3)	Var %	2203 (12)	2103 (12)	Var %
Sales	109.53	73.28	49	452.98	414.53	9
OPM (%)	0.93	-0.81		2.19	4.36
OP	1.02	-0.59	-273	9.90	18.06	-45
Other inc.	0.85	1.84	-54	2.82	2.77	2
PBIDT	1.87	1.25	50	12.72	20.83	-39
Interest	0.09	0.18	-50	0.76	1.64	-54
PBDT	1.78	1.07	66	11.96	19.19	-38
Dep.	0.50	0.69	-28	2.28	3.10	-26
PBT	1.28	0.38	237	9.68	16.09	-40
Tax	0.32	0.10	220	2.00	5.47	-63
PAT	0.96	0.28	243	7.68	10.62	-28
EPS (Rs) *	0.7	0.2		1.4	2.0
* Annualized On current Equity of Rs 10.74 crore of face value of Rs 2 each, Figures in Rs crore, Source: Capitaline Corporate Database

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