Eimco Elecon (India), the mining machinery major has disappointed with its sales for the quarter ended Sep ’06 decline by 4% to Rs 24.32 crore. Operating margin nearly stayed flat (just 10 bps drop to 22.7% yoy) on year on year basis, the operating profit stood at Rs 5.53 crore, a fall of 4%. However though a significant spurt coming from higher other income and lower interest cost the net profit finally stood declined by 34% (to Rs 1.72 crore) suffered by higher depreciation and taxation.
- Sales for the quarter ended Sep ’06 was lower by 4% to Rs 24.32 crore and value of production was lower by 10% to Rs 22.36 crore.
- Falling volume has a crippling impact on the operating margins especially resulting in cost-push up of fixed cost as a proportion to sales. Material cost as a proportion to sales (net of stocks) was lower by 30 bps to 44.1%. And similarly the distributors compensation was lower by 260 bps to 13%. On the other hand the staff cost and other expenses were higher by 90 basis points to 5.7% and 60 basis points to 12.5%. Consequently the OPM eroded by just 10 basis points to 22.7%.
- Higher other income (up 44% to Rs 59 lakh) and lower interest cost (down 18% to Rs 61 lakh) together have arrested the fall in profits, leaving the PBDT higher by 1% to Rs 5.51 crore. However with depreciation higher by 17% to Rs 1.89 crore, the PBT stood declined by 6% to Rs 3.62 crore.
- Net-profit finally stood lower by 34% to Rs 1.72 crore hit by higher taxation that was higher by 53% to Rs 1.90 crore.
Eimco Elecon (India) (Eimco Elecon) was incorporated in 1974 and is a joint venture between Tamrock OY, Finland (25% equity stake) and Elecon Engineering Company, India, and its associates (47%). It produces a wide range of underground mining machinery. The range of products includes Electro hydraulic side dump loaders, load haul dumpers, air powered rocker showel loaders and low profile dump trucks. It also manufactures blasthole drills, hydraulic cylinders and air motors.
Eimco Elecon's major clients are the subsidiaries of Coal India Limited Viz. Bharat Cooking Coal. Eastern Coalfield etc. Other clients include Singanery Collieries Co.. Uranium Corporation of India. Bharat Gold Mines, Hindustan Copper, Hindustan Zinc, Larsen & Toubro. Ferro Alloys Corporation etc.
Half yearly results
Sales for the half year ended Sep ‘06 was higher by 9% to Rs 45.26 crore. Operating profit was up by modest 8% to Rs 10.96 crore with OPM down by 30 bps to 24.2%. Other income was lower by 44% to Rs 2.0 crore and interest was higher by 2% to Rs 1.36 crore. Depreciation was higher by 20% to Rs 3.78 crore. Thus PBT was higher by 7% to Rs 6.87 crore. After providing for taxation (higher 8% to Rs 2.31 crore) the net profit was higher by 6% to Rs 4.56 crore.
Valuation
On equity paid-up of Rs 5.77 crore (face value of 10), the EPS for FY ’06 works out to Rs 14.3. The stock quotes around Rs 351.95.
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