Kirloskar Brothers (KBL), one of the leading players in the Indian pump market, has registered a sale of Rs 502.37 crore, a fall of 8% for the quarter ended March 2016. But lower sales together with 440 bps contraction in operating profit margin dragged the operating profit down by 48% to Rs 28.49 crore. Other incomes was higher by 224% to Rs 10.65 crore and thus the degrowth at PBIDT stood moderated at 33% to Rs 39.15 crore. Interest cost and depreciation though stood lower in absolute terms as proportion to operating profit was higher and thus the PBT was down by 45% to Rs 19.25 crore. With tax write back for the quarter stand higher by 71% to Rs 1.84 crore, the fall at net profit was 41% to Rs 21.09 crore.
- Operating sales (excluding other operating income) was lower by 8% to Rs 494.75 crore. But the value of production for the quarter was lower by 8% to Rs 483.38 crore. Sales for the quarter higher than value of production reflects liquidation of earlier period inventory.
- Down side at operating income was largely on account of 7% fall in revenue of pumps to Rs 466.08 crore (or 93% of sales). Segment revenue of others was down by 21% to Rs 36.16 crore on low base.
- The company changed the percentage for recognizing profits on projects covered under AS 7, ‘Construction contracts' in the current quarter from the current range of 35-50% to 25% on all projects.
- Operating margin contracted by 440 bps to 5.7% as material cost and staff cost stand higher. The material cost (as % to sales net of stocks) was higher by 110 bps to 52.3%, the staff cost was higher by 150 bps to 10.2% and the other expense was up by 530 bps to 21.5%. Though cost of traded goods was down by 360 bps to 10.2% that is not enough to offset the rise in material, staff and OE.
- Other income was up by 224% to Rs 10.65 crore, the interest cost was lower by 1% to Rs 10.38 crore and depreciation was lower by 26% to Rs 9.52 crore. Thus the PBT before EO was down by 45% to Rs 19.25 crore.
- EO Exp for the quarter and corresponding previous period was nil. Taxation was a write back of Rs 1.84 crore compared to Rs 1.08 crore in the corresponding previous period. Thus the PAT was down by 41% to Rs 21.09 crore.
Yearly performance
Standalone sale for the period was higher by 2% to Rs 1656.24 crore. But with OPM contract by 170 bps to 3.5%, the operating profit was down by 31% to Rs 58.47 crore. After accounting for higher other income, lower interest and depreciation cost, the PBT was higher by 16% to Rs 6.42 crore. After accounting for tax write back of Rs 5.39 crore (up 82%) the net profit was higher by 39% to Rs 11.81 crore.
However consolidated sale was lower by 5% to Rs 2594.36 crore. But with 450 bps contraction in OPM, the operating profit was down by sharp 66% to Rs 65.30 crore. After accounting for higher other income, higher interest cost and lower depreciation, the PBT was a loss of Rs 33.69 crore compared to a profit of Rs 62.53 crore. Taxation was a write back of Rs 1.53 crore compared to a provision of Rs 17.27 crore in the corresponding previous period. Thus at PAT level it was a loss of Rs 32.16 crore compared to a profit of Rs 45.25 crore in the corresponding previous period. After accounting for minority interest of Rs 1.08 crore (down 74%), it was a loss of Rs 33.24 crore at net profit level compared to a profit of Rs 41.10 crore in the corresponding previous period.
Other developments
The company declared interim dividend of 25% (or 0.50 per share) on March 14, 2016 which is considered to be final.
Kirloskar Systech (KSL), a wholly owned subsidiary of the company has filed a petition to sanction the proposed scheme of amalgamation between KSL and the company with the Honourable high Court of Judicature at Bombay on April 20, 2016. The said petition has been admitted by the Honourable high court subject to the compliance of certain conditions.
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