The company reported steady earnings for the year ended March 2014. But earnings were disappointing for the fourth quarter ended March 2014 as margins dropped. Net profit in Q4 was further pulled down by significant rise in tax provision.

Munjal Showa products serve as original equipment to a wide range of Maruti Suzuki upper end cars and export models, Honda City car, complete range of Hero Honda Motorcycles, Kawasaki Bajaj Motorcycles, and Hero range of mini-motorcycles and mopeds and Honda Motorcycles and Scooters India (Pvt) Limited. In over a decade the Company's state-of-the-art Shock Absorbers, Front Fork, Struts and Window Balancers/Gas Springs have become symbols of reliability and quality for popular two and four wheeled vehicles.

Good monsoon last year led to revival in demand for two-wheelers and Munjal Showa is a key supplier of components for two-wheelers. Its main clients Honda Motorcycles and Hero Motocorp, both are on the growth path in domestic market as well as have substantial export plans.

Annual Performance:

For the year ended March 2014, the company has reported marginal rise in the total income from operations at Rs 1598.6 crore. OPM stayed steady at 6.7%. The raw material cost as % of sales net of stock adjustments was steady 74.4%. The other expenses (as % of sales net of stock adjustments) decreased 60 bps to 13.4% while employee cost rose 60 bps to 5.5%. There was a 1% rise in operating profit to Rs 107.1 crore.

With good help from rise in other income to Rs 5.5 crore (up by 183%), PBIDT increased by 4% to Rs 112.6 crore. The company's interest cost fell by 84% to Rs 1.12 crore. Depreciation charges shot up by 3% to Rs 28.41 crore. After this PBT before forex loss/gain rose by 13% to Rs 83 crore. Forex loss for the year stood at Rs 1.25 crore (vis a vis gain of Rs 53 lakh in last year). Thus, profit before tax before EO increased by 10% to Rs 81.77 crore. The company had incurred an EO expense of Rs 1.58 crore this year as additional interest charges against Rs 6.14 crore in FY 13. Thereafter PBT after EO rose by 18% at Rs 80.2 crore. After 45% rise in tax provision at Rs 10.5 crore, (240 bps rise- in tax rate), the company's net profit rose by 15% at Rs 69.7 crore.

Quarterly Performance

For the fourth quarter ended March 2014, the company has reported 5% increase in the total income from operations at Rs 417 crore. The raw material cost as % of sales net of stock adjustments rose 160 bps to 74.8%. The other expenses (as % of sales net of stock adjustments) fell 60 bps to 13.2%. Employee cost rose by 30 bps to 5.1%. Resultantly, Operating margins decreased by almost 120 bps to 6.9% (against 8.1%) leading to a 11% drop in operating profit to Rs 28.7 crore.

With 16% drop in other income to Rs 52 lakh (vis a vis Rs 62 lakh), PBIDT decreased by 11% to Rs 29.2 crore. The company's interest cost fell by 77% to Rs 38 lakh and depreciation charges fell by 11% to Rs 6.91 crore. After this PBT before forex loss/gain fell by 7% to Rs 21.93 crore. Forex gain for the quarter stood at Rs 31 lakh (vis a vis Rs 10 lakh last year), a rise of 210%. Thus, profit before tax decreased by 6% to Rs 22.24 crore. After 161% rise in tax provision at Rs 3.39 crore, (980 bps rise in tax rate), the company's net profit fell by 16% at Rs 18.85 crore.

• The promoters' share in the total shareholding was steady at 65.01% in Mar 2014. Promoters have pledged nil shares in the company.

• The company announced its earnings on 23 May 2014. The scrip closed lower by 6.7% at Rs 105.25 after hitting a high of Rs 115 earlier during the day at BSE.