Key Highlights

There was a onetime expense of around Rs 3.5 crore in June'16 quarter related to some consultancy expense on restructuring exercise and some warranty charge issues.

The other income for June'16 quarter included a dividend income from subsidiary of Rs 5 crore which normally is received in Dec quarter every year. This dividend income together with some additional R&D benefits helped in lower tax for June'16 quarter.

During June'16 quarter, Chinese operations were scaled down substantially, entire machines were shifted to India and manufacturing will take place in India and while warehousing and after sales service will continue to remain in China.

The company did not had any option for the French acquisition Belair but to hand it over to court for administrative purpose. The company will suffer a book loss of around Rs 45 crore in FY'17 because of this handover.

Italian subsidiary Rotair also did not perform well. One of the major customers from Algeria which contributes about 20% of revenue slowed down its offtake due to issues in Algerian economy. Otherwise the electric industrial compressor has grown in Italian market.

Lot of debt restructuring was incurred in Brazil and thus losses were removed. However markets are in bad shape and the subsidiary will take some more time to do well at operating level, although interest costs were taken care off.

In US, there was some marginal improvement in June'16 on YoY basis. However as per the management, lot of serious action and budgeting is required in US subsidiary, and the same will be undertaken in FY'17.

Domestically, in India while the small and medium orders continued to flow in, large projects continue to remain sluggish. Momentum in green field capital addition in India is yet to be seen. Industrial markets have grown well in India particularly the mining and road construction side. Clear demand of small and medium machines was visible in the markets. While volumes are less in this segment, margins are good.

Locomotive inventory also was built up in June'16 quarter and lot of demand for compressor for railways was visible.

Automotive business should continue to remain a steady growth driver for the company.

No new acquisitions have been planned.

Management aims to consolidate its acquisitions in FY'17 and to increase the capacity utilization of these subsidiaries going forward.

Margins for June'16 quarter is sustainable and should improve going forward.