Quarterly Performance

For the quarter ended Mar’07 the net sales of International Combustion (India) have gone up by 16% to Rs 24.10 crore. The OPM spurted by 490 bps to 22.4% leading to a 48% rise in operating profit at Rs 5.40 crore. The upside in margins was triggered by overall savings in costs during the period. Both raw material costs and other expenditure (as a % to sales) depreciated by 230 bps and 160 bps to 51.2% and 15.1%, respectively. The staff costs as a % to sales was almost flat at 11.4%, rising marginally by 10 bps.

The other income stood at Rs 0.35 crore, recording an upside of 133% as compared to the corresponding previous quarter. With interest outgo falling by 8% to Rs 0.12 crore and the depreciation cost up by 9% to Rs 0.70 crore, the PBT before EO stood at Rs 4.93 crore, rising by 63%. There was an EO expense amounting to Rs 0.50 crore relating to write-off of certain loans and advances and debtors’ balances as against Nil in the corresponding previous quarter. Hence the PBT after EO stood at Rs 4.43 crore, up by 47%.

Further, the provision for taxation (including deferred tax and fringe benefit tax) rose by 46% to Rs 1.63 crore, thereby causing the Net profit to conclude at Rs 2.80 crore, registering a growth of 47%.

Performance for the year ended Mar’07

The net sales had recorded an increase of 19% to Rs 79.81 crore for the year ended Mar’07. The OPM expanded by 360 bps to 20.2%, thereby causing the operating profit to rise by 45% at Rs 16.12 crore.

The other income appreciated by 80% to Rs 1.08 crore. The interest outgo slid by 55% to Rs 0.33 crore and the depreciation cost increased by 37% to Rs 2.63 crore. As a result of which the PBT before EO increased by 57% to Rs 14.24 crore. EO item was Rs 1.31 during the year as against Nil in the previous year. The EO item is towards write-off of certain loans and advances and debtors’ balances.

Therefore, the PBT after EO stood at Rs 12.93 crore, up by 43%. After accounting for a taxation of Rs 4.65 crore (up by 41%), the Net profit finally registered a growth of 44% at Rs 8.28 crore.

Segment results

International Combustion (India) has two segments namely Mineral & Material processing & Handling equipment and Geared Motor & Gear Box. The segment results were as follows:

Mineral & Material processing & Handling equipment division

For the quarter ended Mar’07, this division posted a sales growth of 25% to Rs 18.42 crore, thus contributing almost 76% to the total sales. The PBIT for the segment increased by 112% to Rs 6 crore contributing 87% to the total PBIT, on the back of a more than 1000 bps expansion in segment margins to 32.6%.

For the year ended Mar’07, sales of this division increased 26% to Rs 63.27 crore and PBIT rose by 55% to Rs 19.89 crore. This division accounted for almost 79% of the total sales and 90% of total PBIT during the period.

Geared Motor & Gear Box division

For the quarter ended Mar’07, the equipment division witnessed a 5% drop in sales to Rs 5.91 crore contributing 24% to the total sales. The margins in this segment also dropped to 14.7% from 33.4% in the corresponding previous quarter, thereby causing the PBIT ti decline by 58% to Rs 0.87 crore.

For the year ended Mar’07 the PBIT of this division declined by 48% to Rs 2.09 crore (contributing to 10% of the total PBIT) on a segment sales of Rs 17.18 crore (up by 2%) and contributing to 21% of total sales.

Board recommends dividend

The Board of Directors recommended a dividend of 50% on equity shares subject to the approval of the Company.

Valuation

On an equity of Rs 2.39 crore and face value of Rs 10 per share, EPS for the year ended Mar’07 stands at Rs 38.2. The scrip currently trades at Rs 324.80 on the BSE.