On standalone basis the sales was higher by 50% (to Rs 207.93 crore) and the net profit was higher by 65% to Rs 26.99 crore largely aided by higher sales and 100 bps expansion in operating margin.

Pursuant to the approval of its scheme of amalgamation of Elgi Industrial Products (formerly Elgi Finance) by Honaurable High court of Madras vide its order dated Sep 24, 2010, the entire assets, liabilities and reserves of Elgi Industrial Products stand transferred and vested in the company as a going concern with all its assets from April 1, 2009. Thus the results for the quarter and half year ended Sep 2010 are after giving effect to the scheme of amalgamation and that of corresponding previous period are without consideration of the scheme of amalgamation. Thus the quarters and half ended Sep 2010 is not strictly comparable.

• Consolidated sales for the quarter were higher by 55% to Rs 250.07 crore with both compressor as well as automotive business posted double digit growth for the quarter. While the compressor business grew by 55% (to Rs 213.76 crore) the automotive business grew by 25% (to Rs 27.96 crore). Compressor business continue to witness strong traction across all segments. Barring railways which is tender driven all other segments such as Construction and mining, industrial etc have witnessed strong demand growth. On the other hand the automotive business had the cascading effect of improved automobile sales in the country. The improved automobile sales led to setting up of more garages which in turn drove the demand for automotive equipments benefiting the company.
• On operating front while the segment margin of automotive equipment was steady that of of compressors expanded handsomely for the quarter ended Sep 2010. Segment margin of compressor was higher by 230 bps to 18.8%, but that of automotive was lower by 10 bps to 13.1%. The segment margin of automotive business under constant pressure from unorganised sector.
• Segment profit of compressore was higher by 77% to Rs 40.15 crore on the back of higher sales and expansion in margin. The profit growth of compressores was largely driven by standalone business with both Bellair (of France) and that of Chinese still in red. On deducting the consolidated compressor segment profit with that of standalone the overseas entities made a loss of Rs 1.08 crore compare to Rs 2.32 crore in the corresponding previus period. Q2FY11 is the second full quarter of contribution from Bellair and according to the management it has done better than last year. The Chinese operationg is also in red and it will take atleast another 2 years to turn black.
• The operating margin has expanded by 130 bps to 18.3% facilitated largely by lower other expenses and staff cost. While the other expenses as proportion to sales net of stocks was lower by 230 bps to 13.3% that of staff cost was lower by 30 bps to 9%. But for higher material cost on the back of escalating commodity prices which increased by 180 bps (to 59.9%) the margin expansion would have been further steeper.
• Other income was lower by 9% to Rs 0.82 crore. And interest income was higher by 85% to Rs 1.87 crore. Depreciation was higher by 7% to Rs 2.54 crore. Consequently the PBT before EO was higher by 70% to Rs 45.91 crore. EO expenses on account of VRS compensation is Rs 0.09 crore as against nil in the corresponding previous quarter. Thus the PBT after EO was up 70% to Rs 45.82 crore. The tax was higher by 60% to Rs 15.57 crore. The PAT was evenutally higher by 75% to Rs 30.24 crore.

Consolidated half yearly results

Sales for the period were higher by 57% to Rs 457.74 crore. As OPM expand to 16.2% from 16%, the operating profit growth was higher by 59% to Rs 74.33 crore. With other income lower by 29% to Rs 1.30 crore, the interest income was higher by 122% to Rs 3.55 crore, the PBDT was higher by 58% to Rs 79.18 crore. The depreciation was higher by 7% to Rs 5.03 crore. Thus the PBT before EO was up by 63% to Rs 74.15 crore. The EO for the fiscal was Rs 0.09 crore and that for corresponding previous fiscal was nil. Thus the PBT after EO was up 63% to Rs 74.06 crore. After accounting for taxation of Rs 24.65 crore (up 44%) the net profit was higher by 74% to Rs 49.41 crore.

Bonus at 1:1

The company to issue bonus shaes in the ratio of 1:1 to share holders and issue shares to employees under ESPS scheme to commemorate the Golden Jubilee year of the company. This was approved by the meeting of Board of Directors of the company on Oct 28, 2010.

Outlook

While India has so far shown the strongest performance of all economies in the Asia region, other regions are showing hesitant recofery. With the outlook for the domestic demand remaining solid the company is set to achieve the planned results for the ensuing quarter.

The share price currently trades at Rs. 197.45.