• Sales net of excise duty was up by 7% to Rs 709.25 crore. Gross sales excluding excise duty and other operating income) was up by 7% to Rs 764.58 crore. But the value of production for the quarter was up by 10% to Rs 778.89 crore. Sales for the quarter was 1.8% lower than the sales and this reflects built up in inventory that will get liquidated going forward.
• Operating profit margin contracted by 290 bps to 8.5% and this is largely due to sharp rise in both cost of traded goods and other expenses. The material cost as % to sales net of stocks and excise duty was down by 50 bps (to 48.9%) as the prices of pig iron is on ascent recently. And the staff cost was down by 60 bps (to 7%). However the cost of traded goods was up by sharp 270 bps to 16.5% and other expenses was up 190 bps to 18.6%.
• Other income was lower by 36% to Rs 18.12 crore. The interest cost (net) was up by 24% to Rs 0.84 crore. The depreciation was up by 1% to Rs 27.82 crore. Thus the fall at PBT (before EO) was 33% to Rs 54.47 crore.
• EO income was nil for the quarter as well as corresponding previous quarter. The taxation (net of deferred tax) in absolute terms was down by 22% to Rs 18.02 crore and tax rate was higher at 33.1% compared to 28.2% in corresponding previous period. Hit thus the PAT was down by 38% to Rs 36.45 crore.
• The other comprehensive expense net of tax was down by 11% to Rs 0.09 crore. Thus the total comprehensive income was down by 38% to Rs 36.28 crore.

Yearly performance

Sales net of excise was higher by 9% to Rs 2875.15 crore. However hit by 70 bps contraction in OPM to 9.8%, the growth at operating profit was restricted to 2% to Rs 280.75 crore. The PBT (before EO) was up by 9% (to Rs 252.30 crore) after accounting for lower interest cost, higher depreciation and higher other income. The EO item is nil for the period as against an expense of Rs 25.48 crore in corresponding previous period. Thus on deflated base, the PBT after EO was up by 23% to Rs 252.30 crore. The taxation jumped up by 98% to Rs 78.68 crore and thus hurt the PAT was eventually higher by just 5% to Rs 173.62 crore.

Other developments

The Company pursuant to the approval of the Board of Directors, has signed definitive agreements on 21^st June 2017, for acquisition of 100% equity shares of La-Gajjar Machineries Private (LGM). LGM is based at Ahmedabad and engaged in the manufacturing and sale of Submersibles, monoblock pumps, Stainless steel pumps and pumpsets in the domestic and export markets. On 1 August 2017, the Company has acquired 76% of equity shares of LGM as per terms of Share Purchase Agreement dated 21 June 2017. Accordingly, La-Gajjar Machineries Private Limited has become a subsidiary of the Company with effect from 1 August 2017.

The stock hovers around Rs 400.05.