• Revenue of both Material handling equipment (MHE) and transmission equipment (TE) stood lower for the quarter. Segment revenue of TE was down by 8% to Rs 189.54 crore (or 64% of sales). But the segment revenue of MHE was down by 3% to Rs 100.89 crore or 34% of sales.
  
• Upside at EBIT level despite lower sales in both business of the company is largely due to 79% jump in segment profit of TE to Rs 24.75 crore facilitated largely by 690 bps expansion in segment margin to 16%. On the other hand the segment loss of MHE was at Rs 6.27 crore compared to a loss of Rs 3.39 crore in the corresponding previous period.
  
• Expansion in operating margin to the extent of 410 bps is largely on account of sharp fall in material cost. Material cost as a % of sales net of stocks was lower by 1520 bps to 53.7%. However the staff and OE were up by 320 bps and 70 bps respectively to 15.9% and 15.9%.

Standalone sales for the quarter ended Sep 2015 was down by 5% to Rs 111.40 crore. But an 860 bps expansion in OPM saw the operating profit jump by 44% to Rs 27.71 crore. After accounting for higher OI, higher interest and depreciation cost, the PBT was up by 158% to Rs 10.13 crore. Taxation was up by 157% to Rs 3.22 crore. Eventually the net profit was up by 159% to Rs 6.91 crore.

On deducting standalone sales from that of consolidated sales, the sales of subsidiaries were lower by 5% to Rs 171.75 crore. The operating profit was up by 32% to Rs 7.61 crore with OPM expand by 120 bps to 4.4%. After accounting for higher interest, depreciation the PBT was a loss of Rs 9.9 crore compared to a loss of Rs 9.2 crore in the corresponding previous period. Eventually the PAT was a loss of Rs 10.43 crore compared to a loss of Rs 9.97 crore in the corresponding previous period.

Half yearly results

Consolidated sales was down by 5% to Rs 540.29 crore and the operating profit was higher by 30% (to Rs 66.11 crore) with OPM stand expanded by 320 bps to 12.2%. At PAT level it was a loss of Rs 2.81 crore compared to a loss of Rs 14.63 crore in the corresponding previous period. But after accounting for higher share of profit from associate and higher minority interest, the net profit (after MI) was a profit o of Rs 5.53 crore compared to a loss of Rs 9.71 crore in the corresponding previous period.

Management comment

Commenting on the Company s performance for Q2/H1 2016, Prayasvin Patel, and CMD commenting on the performance of the company has said, "We had a fairly decent quarter for the gears business with a significant improvement in the margin profile of the company. The topline remained flat year on year, but the performance has improved on a quarter to quarter basis. The momentum in the infrastructure activity is still to pick up and hence there has been a drop in the orders booked during the quarter, however the order book remains robust for execution in the coming quarters. We continue to encounter challenges in the MHE business with no significant uptake in the core sector. While we have orders in hand, the momentum of project execution at the customer level remains subdued." He further added. " At the macro level, the signs of economic revival specially the RBI s rate cut and improving IIP Data is giving us hope that the long term initiatives coupled with policy decisions will bring back the capex activity thrust in coming quarters "

Other Developments

The Company has an unexecuted order book of Rs 258 crore as on Sep 2015. Order intake in Q2FY16 was Rs 112 crore.

The stock hovers around Rs 77.85.