Consolidated sales for the quarter were higher by 10% and the PAT was higher by 5% to Rs 3.38 crore.

WS Industries (India) is the second largest insulator manufactured in the country with a product range of 220 KV till 1200 KV. Insulators are non conductors that are getting used in T&D lines in power sector. The company is currently expanding its capacity for substation insulators from 8000 tones to 18000 tones by way of setting up a green field plant in Vizag.

Quarterly performance

Sales for the quarter ended Sep’08 was higher by 10% to Rs 62.47 crore. Upside at revenue came from electro porcelain products business whose segment revenue was higher by 10% to Rs 57.07 crore (or 92% of sales). On the other hand the segment revenue of projects business was nearly flat at was Rs 5.13 crore (or 8% of sales).

Operating profit margin (OPM) however shrunk by 310 bps (to 12.6%) thus resulted in a decline of 17% in operating profit to Rs 7.86 crore. Sharp fall in margin is largely on account of higher fuel cost and material cost on year on year basis. The material cost as a proportion to sales was higher by 120 bps to 47.5%, the power and fuel was higher by 360 bps to 17.3%. However the staff cost and other expenses were lower by 10 bps and 210 bps to 9.3% and 12.9% respectively. But lower staff and other expense could not fully offset the rise in material cost and fuel cost thus leaving the OPM to erode. On segment basis the segment margin of electro porcelain products business was lower by 380 bps to 11%, on the back of rise in prices of kerosene. But that of projects was higher by 465 bps to 11.3%. Impacted by lower margin the segment profit of electro porcelain products business was lower by 18% to Rs 6.30 crore despite higher sales. But that of projects flat lower sales spurred by higher segment margin registered a segment profit growth of 71% to Rs 0.58 crore albeit on a lower base.

Other income for the quarter was nil compared to Rs 1 lakh in corresponding previous period. The interest cost was lower by 16% (to Rs 1.86 crore) and depreciation cost was up by 5% (to Rs 98 lakh). Consequently the PBT was lower by 21% to Rs 5.02 crore. But with taxation stand decreased by 50% to Rs 1.60 crore, the growth at net profit level was 8% to Rs 3.42 crore. Compared to full year tax rate of 21.8% in FY 08 the company has provided at 50.3% in the Q2 FY08. The tax rate for the quarter at 31.9% seems lower on a unusual higher base on year on year comparison providing spurt in net profit growth.

Half yearly performance

Sales for half year was higher by 9% to Rs 114.40 crore but the operating profit declined by 14% to Rs 13.80 crore as OPM erode to 12.1% compared to 15.3% in corresponding previous period. The net profit finally was lower by 24% to Rs 5.39 crore as there is no major gain from other income, interest cost or depreciation.

The stock hovers around Rs 31.50. Promoter shareholding as end of Sep 2008 was unchanged at 42.21% compared that as end of Jun 2008, but seen marginal increase from 42.01% as end of Mar ’08 and 41.97% as end of corresponding previous period.