Polycab India registered 52% jump in consolidated net profit for the quarter ended Mar 2020 to Rs 213.94 crore. Strong jump in net despite 14% fall in sales to Rs 2129.38 crore was largely due to 420 bps expansion in operating profit margin that powered operating profit up by 23% to Rs 300.57 crore, 114% jump in other income to Rs 46.46 crore, lower interest cost and lowr tax incidence. But for higher depreciation, Rs 8.06 crore swing in share of loss from associate to Rs 5.78 crore and Rs 1.42 crore swing in minority interest to share of profit to Rs 1.21 crore, the growth would have been even steeper than reported.
- Downside in sales was largely due to fall in sales reported by all segments. Segment revenue of wires & Cables (W&C) was down by 12% to Rs 1860.54 crore (or 84% of sales). The segment revenue of FMEG was down by 6% (to Rs 183.27 crore or 8% of sales) and that of others was down by 27% (to Rs 159.15 crore or 7% of sales).
- EBIT was up by 35% to Rs 299.33 crore with strong growth from all the business especially the core W&C business. The core W&C business registered 36% growth in segment profit to Rs 282.71 crore largely due to 540 bps expansion in its segment margin to 15.2%. However the FMEG business registered 92% fall in its segment profit to Rs 0.11 crore hit by lower sales as well as 70 bps fall in FMEG to 0.1%. The segment profit of others was up by 26% to Rs 16.51 crore.
- OI more than doubled (up 114%) to Rs 46.46 crore and thus the PBIDT was up by 31% to Rs 347.03 crore. The interest cost was down by 39% to Rs 15.93 crore. And thus the PBDT was up by 39% to Rs 331.10 crore. The depreciation was up by 23% to Rs 42.18 crore and thus the PBT was up by 41% to Rs 288.92 crore.
- Taxation (net of deferred tax) for the period being up by 2% to Rs 68 crore but the tax rate was lower at 23.5% compared to 32.6% in the corresponding previous period. But the PAT was up by 60% to Rs 220.93 crore.
- The share of profit from associate was a loss of Rs 5.78 crore compared to a profit of Rs 2.28 crore in corresponding previous period. The minority interest was share of profit of Rs 1.21 crore compared to a share of loss of Rs 0.21 crore in the corresponding previous period. Thus the net profit after MI was up by 52% to Rs 213.94 crore.
Yearly performance
Sales for the period was up by 11% to Rs 8829.96 crore. With OPM expand by 100 bps to 12.9%, that along with higher sales facilitated 19% growth in operating profit to Rs 1135.03 crore. The PBT was up by 34% to Rs 1017.40 crore gained by higher other income, lower interest and lower depreciaton (as % of sales). The taxation was down by 4% to Rs 244.37 crore and thus the growth at PAT was 54% to Rs 773.03 crore. Eventually the net profit after MI was up by 54% to Rs 773.03 crore.
Management comment
Commenting on the financial performance, Inder T. Jaisinghani, Chairman and Managing Director, Polycab India, said: "We achieved healthy underlying performance with improved profitability in FY20. Polycab maintained its dominant position in Wires and Cables and continues to expand its presence in the ‘Electricals' ecosystem. The year was marked with strong business momentum despite significant headwinds however the outbreak of COVID-19 pandemic and its severe economic implications partly tapered growth. We are undertaking all necessary measures to ensure safety and well-being of our employees, partners and to support, dealer, distributors, customers, and communities across India. Our financial stability, inhouse backward integration, wide distribution channels and quality human capital, positions us well to deal with any challenge. Parallelly, we are also refining our strategy to capture emerging trends and succeed in the transforming world. Government reforms and initiatives will certainly help the broader economy and people. Polycab being a true example of made in India brand will continue to contribute to nation's growth and governments vision to make India a self-reliant economy."
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