Performance for the nine months ended Dec'14

For the nine months ended Dec'14, the standalone net sales of the company grew by 11% to Rs 4076.25 crore. OPM was up by 130 bps due to higher EXIM volume to 24%, resulting a 17% increase in OP to Rs 978.05 crore. Other income was up by 1% to Rs 260.14 crore. Due to revised accounting standard, depreciation rates were revised upwards and thus depreciation for the nine months ended Dec'14 was up by 109% to Rs 291.67 crore. After providing total tax of Rs 191.68 crore, down by 11%, PAT for the nine months ended Dec'14 stood at Rs 754.84 crore, up by 2% YoY.

FY 2014 results

Standalone sales were higher by 13% to Rs 4984.55 crore. With OPM contract by 170 bps to 22.1% the growth in operating profit moderated to 5% to Rs 1101.86 crore. After accounting for higher other income, higher depreciation and marginally higher tax incidence the PAT was higher by 5% to Rs 989.97 crore. Prior period adjustments were Rs 5.21 crore for the period compared to a write back of Rs 0.99 crore in the corresponding previous period. After accounting for prior period adjustment, the net profit was up by 5% to Rs 984.76 crore.

Consolidated sales were higher by 15% to Rs 5108.53 crore. But with 250 bps contraction in OPM the operating profit was higher by just 3% to Rs 1078.05 crore. The growth at PAT level was 3% to Rs 956.54 crore. After accounting for higher PPT and minority interest the net profit was eventually higher by 2% to Rs 949.86 crore.

Other operating expenses included operating expenses of Fresh & Healthy Enterprises Ltd. (FHEL) (100% subsidiary), which comprise of (a) purchases of stock in trade Rs. 46.72 crore (PY Rs. 37.09 crore), and (b) changes in inventories of stock in trade Rs. 40.41 crore (PY (-) Rs. 14.24 crore).

Tax disputes

a) Tax provision for the period is after considering tax deduction of Rs 33.41 crore available u/s 80IA of the Income Tax Act, 1961 in respect of inland ports and rail system set up by the Company on or after April 01, 2001.

(b) As per assessment orders under section 143(3) of the Income Tax Act, 1961, the Assessing Officer (AO) disallowed certain claims of the company, mainly deduction under section 80IA in respect of Rail System for assessment years 2003-04 to 2007-08 & 2009-10 to 2011-12 and Inland Ports (ICDs/CFSs) for assessment years 2003-04 to 2011-12. In appeal, for AY 2003-04 to 2007-08 & 2009-10, deduction for Rail System has been allowed by CIT (A). On the matter of deduction for Inland Ports, same has been allowed by the Hon'ble Delhi High Court for AY 2003-04 to 2005-06, by ITAT/Delhi for AY 2007-08, by CIT (A) for AY 2009-10 and for AY 2006-07, the matter has been referred to Delhi Bench of ITAT by Special Bench of ITAT/Mumbai giving a verdict that ICDs/CFSs set up by the company are Inland Ports.

In appeal, for AY 2008-09, the decision of AO on the issue of disallowance of Inland Port deduction has been upheld by CIT (A) & the company has filed appeal against his orders with Hon'ble ITAT/Delhi. Appeal for AY 2010-11 and AY 2011-12 on the issue of disallowance of Rail System and Inland Ports deduction is pending with CIT (A). For AY 2006-07 & 2007-08, department has filed belated appeal(s) with the Hon'ble ITAT/Delhi against the orders passed by CIT(A), vide which relief had been granted in favour of the company with regard to claim of deduction u/s 80IA of the Act for Rail System.

Special Leave Petition (SLP) has been filed by the department before the Hon'ble Supreme Court on the issue of deduction of Inland Ports for AY 2003-04 and AY 2005-06 against the order passed by Hon'ble Delhi High Court in favour of the company and the same has been admitted. Further, department has filed appeal with ITAT/Delhi against the order of CIT(A) for AY 2009-10 on the issue of deduction for Inland Ports and Rail System.

(c) As per assessment orders under section 147/143(3) of the Income Tax Act, 1961, the Assessing Officer (AO) disallowed certain claims of the company for assessment years 2004-05 & 2007-08. In this regard, while the appeal for AY 2007-08 has been allowed in part, appeal for AY 2004-05 has been allowed in full by CIT (A). For AY 2004-05, department has filed appeal and for AY 2007-08, company has filed appeal with the Hon'ble ITAT/Delhi against the orders passed by CIT (A). Demand for AY 2007-08 has been further enhanced by AO vide order passed u/s 154/147/143(3). Appeal filed by the company against the order of AO u/s 154/147/143(3) is pending with CIT (A).

(d) For AY 2006-07, appeal filled with CIT (A) against the order of AO imposing penalty u/s 271(1) (c) has been decided in company's favour. However, department has filed appeal before the Hon'ble ITAT/Delhi against the order of CIT (A).

(e) Total disputed income tax liabilities of the Company stand at Rs 617.65 crore from AY 2003-04 to 2011-12. Out of this, Rs. 289.61 crore is on account of regular assessment, Rs 3.55 crore is on account of re-assessment and Rs 324.49 crore is on account of appeals preferred by department.

Valuation

The stock trades at Rs 1427.