While extremely poor performance at the operational level dragged on the company's bottomline, the same would have dropped further if not for big surge in other income. Drop in interest and depreciation charges put some brake on bottomline slipping further though.

Minda Corporation is one of the largest suppliers of 2-wheeler, 3-wheeler and Off Road vehicles Electronic & Mechanical Security System. The company is a diversified company with a product portfolio encompassing from Mechanical & Electronic Security System, Door System, Electronic Controllers for Electric Vehicles, Plastic Interiors and for Auto OEM's across the Globe. The company also manufactures Die Casting Parts and high class Surface Finishing parts for auto and consumer durable industry. They supply their products to Indian OEM's and exports about 20% of their products to USA, UK, Europe & South East Asia and ASEAN countries. The company is headquartered at Noida.

"On the backdrop of demonetisation, which drastically reduced the liquidity in the market, sales volume for the quarter across the automobile sector were down by 4% on a y-o-y basis in comparison to the 19.1% y-o-y growth in the last quarter," the company's Chairman and Group CEO Ashok Minda said. "We are optimistic of the various pro-reformative measures of the Government being undertaken and also reflected in the recent fiscal Budget augurs well for the auto component sector as a whole in the long term, and we expect the automobile market to revive over the next two quarter," he added.

Quarter Performance

The OPM during the third quarter ended December 2016 dropped 700 bps to 3.4% due to increased raw material expenses cum purchase of stock in trade. Raw material cost cum purchase of stock in trade (as a % to sales, net of stock) increased by 570 bps to 66.4%. Other expenses (% of sales net of stock) rose 100 bps to 12.7%. Employee expenses was steady at 17.4%.

Thus the operating profit fell 64% to Rs 24.69 crore. Other income stood 561% higher at Rs 20.22 crore. After 1% drop in depreciation cost to Rs 21.12 crore and 7% drop in interest cost to Rs 8.98 crore, PBT before EO fell 63% to Rs 14.81 crore. There was no EO item this quarter against EO income of Rs 2.31 crore in previous year. Thereafter PBT after EO fell 66% at Rs 14.81 crore. After substantial rise in tax rate, tax provision stood 26% higher at Rs 11.65 crore. Thereafter, net profit stood at Rs 20.01 crore against profit of Rs 31.55 crore in previous corresponding quarter (after adjusting for minority interest and share of profits), a drop of 36%.

Nine Month Performance:

The company reported 5% drop in consolidated net profit at Rs 77 crore for the first nine months ended December 2016. Net sales of the company rose to Rs 2200 crore for the period as compared to Rs 1800 crore in the year-ago period, a growth of 22%.

The OPM during the period fell by 220 bps to 7.5% due to increased raw material expenses cum purchase of stock in trade and emplpyee expenses. Raw material cost cum purchase of stock in trade (as a % to sales, net of stock) rose by 140 bps to 63.1%. Other expenses (% of sales net of stock) rose 25 bps to 12.3%. Employee expenses rose 50 bps to 17.1%.

Thus the operating profit fell 6% to Rs 164.3 crore. Other income stood at Rs 33.66 crore, higher by 200%. After 13% rise in depreciation cost to Rs 62.91 crore and 9% rise in interest cost to Rs 31.78 crore, PBT before EO fell 8% to Rs 103.29 crore. EO expense stood at Rs 15.55 crore vis a vis nil in previous year. Thereafter PBT after EO fell 21% at Rs 87.74 crore. After 950 bps rise in tax rate, tax provision stood 9% higher at Rs 29.73 crore. Thereafter, net profit stood at Rs 77 crore against profit of Rs 80.85 crore in previous corresponding nine months (after adjusting for minority interest and share of profits), a drop of 5%.

Shares of Minda Corporation are trading around Rs 94 currently at BSE.