In FY 2011 the company changed its name from Saraswati Industrial Syndicate Ltd. to Isgec Heavy Engineering Ltd. All businesses were consolidated and now marketed under a common brand name – Isgec.

March 2019 quarter results

For the quarter, sales jumped 66% to Rs 1356.48 crore. OPM fell 80 bps to 5.1%. Thus OP grew 44% to Rs 68.58 crore.

Other income fell 27% to Rs 6.95 crore. As interest cost jumped 125% to Rs 4.08 crore and depreciation fell 6% to Rs 17.97 crore, PBT went up 47% to Rs 53.48 crore.

Provision for taxation was up 130% to Rs 22.22 crore. Finally, PAT grew 17% to Rs 31.26 crore.

FY 2019 results

In FY 2019 sales, jumped 58% to Rs 4128.92 crore. OPM fell 50 bps to 6.0%. Thus OP grew 46% to Rs 247.42 crore.

Other income fell 49% to Rs 36.90 crore. As interest cost went up 115% to Rs 15.31 crore and depreciation stood at Rs 65.93 crore (against Rs 67.15 crore), PBT went up 21 to Rs 203.08 crore.

Provision for taxation was up 53% to Rs 74.76 crore. Finally, PAT grew 8% to Rs 128.32 crore.

Segment results

For the quarter, sales of from the Manufacturing of Machinery Equipment Division stagnated at Rs 319.15 crore and accounted for 22% of total. PBIT from the same grew 38% to Rs 33.70 crore and accounted for 52% of total.

For the quarter, sales from the EPC Division grew 101% to Rs 1126.87 crore and accounted for 78% of total. PBIT from the same grew 40% to Rs 29.98 crore and accounted for 46% of total.

In FY 2019, sales of from the Manufacturing of Machinery Equipment Division grew 13% to Rs 1202.62 crore and accounted for 27% of total. PBIT from the same grew 2% to Rs 131.70 crore and accounted for 51% of total.

In FY 2019, sales from the EPC Division grew 87% to Rs 3221.43 crore and accounted for 73% of total. PBIT from the same grew 86% to Rs 116.60 crore and accounted for 46% of total.

FY 2019 Consolidated results

In FY 2019 consolidated sales, jumped 32% to Rs 5050.66 crore. OPM fell 250 bps to 5.3%. Thus OP fell 10% to Rs 266.21 crore.

Other income grew 20% to Rs 68.76 crore. As interest cost went up 15% to Rs 25.55 crore and depreciation grew 2% to Rs 82.48 crore, PBT went down 10% to Rs 226.94 crore.

Provision for taxation was stagnant at Rs 82.92 crore. Finally, PAT fell 14% to Rs 144.02 crore.

Other details

The company has been executing contracts to design, engineer, procure, construct, commission and deliver a Bio-Refinery project in the Philippines. There was manifestation of latent conditions leading to cost overrun and delay in completion of the project within the contractual delivery date. The company notified the customer that these risks were to their account under the contract. The customer issued directions to continue with the project and started paying the additional cost to the sub-contractors directly. The project is substantially complete. The customer, on 30th January 2018, however, invoked the Bank Guarantees amounting to about Rs 134 crore and wrongly terminated the contract, and also claimed damages.

The company has referred the dispute to Arbitration under the Singapore International Arbitration Centre (SIAC), as per contract with the customer

The legal advice is that the company has good prospect of success in proving its claims against the customer and accordingly no provision has been made in the books of accounts.

SIAC has constituted the Arbitral Tribunal. The Arbitration is likely to take about 12-15 months for completion. There is no other change till date.

In addition to interim dividend of Rs 5 per Equity Share of Rs 10/-each (already disbursed) the Board of Directors recommends a final dividend of Rs 1.50 per Equity Share of Re 1 each, out of the profits of the company, for the year ended March, 2019, subject to approval of Shareholders in the Annual General Meeting of the Company.

Valuation

The scrip trades at Rs 509.