Sales was up by 5% to Rs 38.30 crore, but the value of production was higher by just 2% to Rs 42.10 crore, which is 9.9% higher than the sales. For the nine months ended Dec'09, the company produced about 300 machines as against 200 machines for same period last year. Thus though there was a 50% growth in production, the sales in value terms was up by only 10%. This is due to the following reasons: The company has entered into supply of new machines to coal India. The company has sold these machines virtually at losses. Normally what happens in mining equipment business is the real margin is into supply of spare parts business. Normally after one year warranty period expires, the company recovers and performs well in margins. Further during the year in which the company starts to sell some equipments for the first time to Coal India, it normally sells at breakeven or very thin profits and the real profits will be recovered in the form of supply to spare parts and after sales service business once the one year warranty period expires. This time there was a stiff competition to get orders from coal India for these new products. The company has decided that they will get the tenders even by incurring losses but ensure that better margins and profits will come in from of supply of spare parts and after sales service business. Further although this is a normal trend that in Q4 of every year, the order execution happens, this time the pile up of orders and more importantly the profitable orders are heavy in Q4. So the entire execution will happen in Q4, which will take care of the year ends margin and profitability. The company is confident of surpassing the year-end net sales target of more than Rs 165 crore.

The operating profit declined by 34% to Rs 4.46 crore. As other income was higher by 220% to Rs 0.16 crore, the PBIDT was lower by 32% to Rs 4.62 crore. The interest cost was higher by 7% to Rs 28 lakh and depreciation cost was lower by 7% to Rs 1.75 crore. As result the PBT before EO was lower by 44% to Rs 2.59 crore. EO income (gross of tax) was Rs .02 lakh as against nil in the corresponding previous period. PBT after EO was lower by 43% to Rs 2.61 crore.

Net-profit finally stood lower by 27% to Rs 1.97 crore benefiting out of lower tax incidence. Taxation for the quarter was lower by 66% to Rs 0.64 crore.

Eimco Elecon (India) (Eimco Elecon) was incorporated in 1974 and is a joint venture between Tamrock OY, Finland (25% equity stake) and Elecon Engineering Company, India, and its associates (47%). It produces a wide range of underground mining machinery. The range of products includes Electro hydraulic side dump loaders, load haul dumpers, air powered rocker showel loaders and low profile dump trucks. It also manufactures blasthole drills, hydraulic cylinders and air motors.

Eimco Elecon's major clients are the subsidiaries of Coal India Limited Viz. Bharat Cooking Coal. Eastern Coalfield etc. Other clients include Singanery Collieries Co. Uranium Corporation of India. Bharat Gold Mines, Hindustan Copper, Hindustan Zinc, Larsen & Toubro. Ferro Alloys Corporation etc.

The sales for the nine month ended Dec 2009 were up by 10% to Rs 105.41 crore. The operating profit was lower by 24% to Rs 15.03 crore as the OPM contract by 650 bps to 14.3%. Other income was lower by 22% to Rs 25 lakh. The interest cost was higher by 26% to Rs 72 lakh, the depreciation was lower by 8% to Rs 5.21 crore. The PBT before EO was lower by 33% to Rs 9.35 crore. EO income (gross of tax) was Rs 11 lakh as against nil in the corresponding previous period. PBT after EO was lower by 32% to Rs 9.46 crore. Taxation was lower by 45% to Rs 2.87 crore. Thus the net profit was lower by 25% to 6.59 crore.

Valuation

The stock quotes around Rs 247.