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Eimco Elecon was promoted as a joint venture between Elecon Engineering Company and Envirotech Corporation, US (a subsidiary of Baker Hughes), to manufacture hi-tech drills and loaders used in underground mining. The company has its operations in a single segment – Machines and spares. The company has reported a disappointing show for the quarter ended June 08, with drop in both topline by 16% as well as in bottom line by 13%. The improvement in OPM by 130 bps to 23.6%, failed to lift up operating profits, and so operating profit was down by 11%. With the rise in effective tax rate of 440 bps to 34.7%, the down trend continued until the bottom line and left Net Profit down by 13%.
Performance for quarter ended June 08
The first quarter of fiscal FY 09 left a disappointing show as the company reported a dip in Net sales by 16% to Rs 27.99 crore. OPM, enhanced by 130 bps to 23.6% made a false attempt to lift Operating profit, and resultantly, Operating profit was down by 11% to Rs 6.61 crore. The dip in consumption cost as % of sales was the main reason behind the expanding margins at operating level. But on the other hand, a modest increase is observed in staff cost, compensation to distributors, and other expenditure.
Going further, the rise in other income by 18%, fall in interest cost and depreciation by 53% and 3% respectively steered PBT to Rs 5.44 crore(down by 7%). With the zooming effective tax rate by 440 bps to 34.7%, Net Profit fell further by 13% to Rs 3.55 crore.
Performance for year ended June 08
The year ended Mar 08, passed away, posting impressive performance with bottom line rise by 54% on the back of 21% growth in Net sales to Rs 116.28 crore. The margins at operating level grew marginally by 70 bps to 21.8% and led operating profit to increase by 25% to Rs 25.31 crore. Interest cost and provision for depreciation fell by 63% and 3% respectively, and steered PBT to rise by 52%. EO income of Rs 0.80 crore was accounted on behalf of profit on sale of investment as against nil in corresponding previous year; made PBT after EO to further increase by 58%, but spike in tax incidence by 68% restricted bottom line to Rs 13.33 crore, ( up by 54%).
Other Information:
- The scrip closed at Rs 325 as on 1 Aug 08.
- The promoters share holding % was constant at 73.13% in the quarter ended June 08 as against the year ended March 08.
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