Cost of material consumed as a percentage of net sales (net of stock adjustment) fell 890 bps to 41.3%. Purchase of stock in trade increased 320 bps to 11.6%. Employee benefit expenses increased 110 bps to 10.2% while other expenses increased 190 bps to 25.4%.

Other income fell 17% to Rs 6.68 crore. Interest cost was Rs 2.81 crore compared to Rs 0.47 crore. Depreciation rose 33% to Rs 20.36 crore. PBT before EO fell 2% to Rs 56.31 crore. The company had nil EO income/expenditure during the quarter compared to EO expense of Rs 45 lakh representing divestment provisions no longer required back. PBT after EO fell 3% to Rs 56.31 crore.

Tax expense was down 67% to Rs 7.06 crore as the company has chosen to exercise the option of lower tax rate of 25.17%. Net profit rose 34% to Rs 49.25 crore.

Performance for half year ended September 2019

For half year ended September 2019, net sales fell 5% to Rs 1353.51 crore compared to corresponding previous year period. However company operating margins rose 340 bps to 13% leading a 28% increase in operating profit to Rs 176.18 crore.

Other income fell 15% to Rs 14.62 crore. Interest cost was Rs 5.34 crore compared to Rs 1.36 crore. Depreciation rose 34% to Rs 40.56 crore. PBT before EO as a result rose 17% to Rs 144.9 crore. The company had nil EO income/expense during the quarter compared to EO expense of Rs 45 lakh in the corresponding previous year period both representing divestment provisions no longer required and accordingly written back. PBT after EO was up 17%. Tax expense was down 12% to Rs 38.51 crore. Net profit rose 33% to Rs 106.39 crore.

Commenting on the performance, Rajiv Rajgopal, Managing Director, AkzoNobel India said, "As we restructure our product portfolio and take actions to improve our mix, we have seen a continued positive impact on our gross margins and profitability. This quarter has seen headwinds in some sectors, mainly Automotive. Our waterproofing range was enhanced with the launch of Dulux Aquatech Roof and Interior Basecoat. Additionally, we introduced Dulux Ambiance Velvet Touch – an exclusive range of super premium interior and special effects paints. Both launches received an encouraging response."

Rajiv added "Over the years, as part of ‘AkzoNobel Cares' initiative, we have been using our expertise to help transform communities. This time, we went a step ahead in providing ‘Skills at Doorstep' through our training van (Kaushal Vahan) to the rural youth. This van is travelling to rural India to facilitate specialized skill training to the painters at grass-root level and promoting Health and Safety awareness."

The scrip is trading at Rs 2154 at BSE