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Eimco Elecon (India), has disappointed with 2% decline in sales for the quarter ended Jun '09. Setback at revenue front was followed with 570 basis points (to 19.9%) contraction in operating margin leading to steep 24% fall in operating profit. The set back at operating level was further aggravated by lower other income, higher interest and thus the net profit was eventually down 31% to Rs 2.45 crore.
Sales was lower by 2% to Rs 28 crore, but the value of production was higher by 12% to Rs 32.40 crore, which is 15.7% higher than the sales. According to the management the reduction in sales value and margins is largely due to execution of lower order-mix during the quarter. Some of the high margin orders were executed during Q1 FY'09 and some lower margin orders were executed in Q1 FY'10. Such quarterly variance will persist in the business given the nature of business and ordering pattern of Coal India. Management expects better performance from H2 FY'10 where high margin orders and orders of new products which the company introduced last year will get executed. Overall, management indicated sales target of around Rs 180 crore for FY'10 with better profitability.
As other income was down by 73% to Rs 3 lakh, the PBIDT was lower by 25% to Rs 5.61 crore. The interest cost was higher by 63% to Rs 0.26lakh and depreciation cost was lower by 8% to Rs 1.70 crore. As result the PBT was lower by 33% to Rs 3.65 crore.
Net-profit finally stood lower by 31% to Rs 2.45 crore benefiting out of lower tax incidence. Taxation for the quarter was lower by 37% to Rs 1.20 crore.
For the year ended Mar'09, the net sales were up by 25% to Rs 118.45 crore. OPM was lower by 210 basis points to 21.2% which included some forex loss due to import of some key components, spare parts etc. This restricted the growth in OP to 14% to Rs 31.32 crore. The other income was down by 42%. Lower interest cost of Rs 0.88 crore, down by 13%, flat deprecation of Rs 7.42 crore and total tax payment of Rs 8.13 crore, p by 15% resulted the PAT of Rs 15.23 crore, up by 22%.
Eimco Elecon (India) (Eimco Elecon) was incorporated in 1974. and is pioneer in underground mining industry. Sandvik, Sweden, holds 25.1% equity stake in the company, while Elecon Engineering Company, India, and its associates hold 48.5%. Thus total promoter's stake is 74% of the tiny equity share capital of Rs 5.77 crore. Nearly 95% of total sales comes from supply of coal mining equipment to Coal India. 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.
Valuation
The stock quotes around Rs 299.65.
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