• Operational income excluding other operating income was down by 8% to Rs 115.61 crore. Downside in operational income is attributed to lower revenue at both compression systems and transmission products. Segment revenue of compression systems was lower by 3% to Rs 102.44 crore or 89% of sales. However the segment revenue of transmission products was down by 34% to Rs 13.17 crore.

• The EBIT was lower by 18% to Rs 13.02 crore as high single digit fall in segment profit of compression system and segment loss at transmission products segment. The segment profit of compression systems was down by 7% to Rs 14.54 crore hurt by lower sales and lower margin. The segment margin of compression business was down by 50 bps to 14.2%. The transmission products however registered a segment loss of Rs 1.52 crore compared to a profit of Rs 0.24 crore in corresponding previous period.

• Contraction in operating profit margin to the extent of 230 bps to 7% was largely due to higher material and staff cost. While the material cost as % to sales net of stocks was up by 310 bps that of staff cost was up by 110 bps to 18.2%. Though other expense was down by 170 bps that could not fully offset the rise in other cost heads leading to contraction in OPM. Thus hit by lower sales and lower OPM the operating profit was down by 31% to Rs 8.23 crore.

• Other income was up by 48% to Rs 3.07 crore thus restricting the de-growth at PBIDT to 19% to Rs 11.30 crore. The interest cost was marginal Rs 0.02 crore as against nil in corresponding previous period. But the depreciation was lower by 1% to Rs 3.91 crore and thus the growth at PBT was down by 27% to Rs 7.37 crore.

• The taxation was down by 52% to Rs 1.36 crore and the effective tax rate for the quarter was 18.5% compared to 28.1% in the corresponding previous period. Thus gained by lower tax incidence the de-growth at net profit moderated and stood at 17% to Rs 6.01 crore.

Half yearly performance

Standalone sales for the period were higher by 5% to Rs 237.78 crore. Higher sales together with 240 bps expansion in OPM facilitated 39% growth in operating profit to Rs 23.04 crore. Though other income stood lower, gained by lower depreciation and lower tax rate, the net profit was up by 36% to Rs 4.79 crore.

Other developments

The Board of Directors in its meeting held on Oct 20, 2016 has approved the Scheme of Arrangement and Amalgamation between Kiloskar Road Railer (the transferor company 1), Pneumatic Holdings (the transferor company 2), Kirloskar Pneumatic Company, the transferee company) and their respective share holders U/s 391 to 394 and other relevant sections of the Companies Act 1956 and the relevant section of companies Act 2013 to the extent applicable. The said Scheme is subject to approval of BSE, SEBI, shareholders of the company, H'ble High Court of Judicature of Bombay and other necessary approvals under various statues. The company shall file the scheme with BSE in due course and make the same available on the website of the company once filed.

The stock hovers around Rs 838.60.