Sundram Fastnersregistered 29% fall in consolidated sales for the quarter ended Dec 2019 to Rs 822.50. However lower sales together with 260 bps fall in operating profit margin to 15.4% has resulted in 39% fall in operating profit to Rs 126.68 crore. The other income was up by 572% to Rs 12.44 crore and thus the fall at PBIDT moderated to stand at 34% to Rs 139.12 crore. Hit further by higher interest cost and depreciation the PBT was down by 49% to Rs 84.78 crore. But with taxation saw a swing of Rs 70.58 crore to a write back of Rs 20.14 crore, the decline at PAT moderated sharply to stand at 10% to Rs 104.92 crore. With MI stand higher by 180 bps to Rs 0.70 crore, the PAT was down by 10% to Rs 104.22 crore.
- Sales (excluding other operating income) was down by 28% to Rs 799.35 crore with domestic sales down by 25% to Rs 537.71 crore and export sales down by 34% to Rs 261.64 crore. But the value of production for the period was down by 31% to Rs 785.70 crore(from Rs 1135.78 crore in the corresponding previous period). Sale for the quarter was 1.02 times higher than value of production but the sales for corresponding previous period was 0.98 times of its value of production. Sales higher than value of production for the quarter reflects liquidation of earlier period stocks.
- Lower OPM by 260 bps to 15.4% was largely due to rise in staff and OE expenses. Material cost as % of sales net of stocks was down by 250 bps to 39.6%. However, the staff cost was up by 300 bps to 12.6% and OE was up by 140 bps to 32.1%. Thus the gain of lower material cost was more than offset by rise in all other cost heads the OPM declined.
- Other income was up by 572% to Rs 12.44 crore gained partially by forex gain of Rs 6.74 crore (against a loss of Rs 1.76 crore). The interest cost was up by 27% to Rs 12.80 crore and the depreciation was up by 26% to Rs 41.54 crore. Thus the PBT was down by 49% to Rs 84.78 crore.
- Taxation was a write back of Rs 20.14 crore compared to a provision of Rs 50.44 crore in the corresponding previous period. The company exercised the option for lower tax rate in quarter ended Dec 2019 and accordingly it has recognized provision for income tax for the nine month ended Dec 31, 2019 and re-measured its deferred tax liability, based on the lower annual effective income tax rate. Thus the PAT was down by 10% to Rs 104.92 crore.
Nine-month performance
Sales was down by 15% to Rs 2892.32 crore and the with 160 bps contraction in OPM to 16.3%, the operating profit was down by 23% to Rs 470.06 crore. After accounting for higher OI, hither interest and depreciation the PBT was down by 36% to Rs 126.07 crore. With taxation stand lower by 68% to Rs 49.81 crore, the PAT was down by 21% to Rs 273.14 crore. Eventually the net profit after MI was down by 22% to Rs 270.32 crore.
The three foreign subsidiaries of the group have financial year ending on Dec 31, whereas the parent company along with its domestic subsidiaries have the year end of March 31. During the current quarter, such foreign subsidiaries have aligned their financial year end with that of the parent company for consolidation purposes, eliminating a 3 month time lag for incorporating the results of such foreign subsidiaries with the consolidate financial results of the Group. As a result of this change, the consolidated financial results for the quarter ended Dec 31, 2019 include the financial results of such foreign subsidiaries for the period Jan 1, 2019 to March 31, 2019 as well. This has resulted in increase in revenue from operation by Rs 100.41 crore and reduction in PAT by Rs 1.38 crore. For the corresponding quarter and nine month ended Dec 31, 2018 the consolidated financial results represents financial results of such foreign subsidiaries for the period July 1, 2018 to Sep 30, 2018 and January 1, 2018 to Sept 30, 2018 respectively.
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