In FY 2011 the company changed its name from Saraswati Industrial Syndicate Ltd. to Isgec Heavy Engineering Ltd. All businesses were consolidated and now marketed under a common brand name – Isgec.

September 2018 quarter results

For the quarter sales, jumped 57% to Rs 1005.71 crore. OPM fell 160 bps to 5.1%. Thus OP grew 20% to Rs 51.55 crore.

Other income fell 68% to Rs 12.06 crore. As interest cost jumped 93% to Rs 3.28 crore and depreciation fell 1% to Rs 15.94 crore, PBT went down 29% to Rs 44.39 crore.

Provision for taxation was down 6% to Rs 15.59 crore. Finally, PAT fell 37% to Rs 28.80 crore.

Six month results

For the six months sales, jumped 52% to Rs 1719.90 crore. OPM improved 30 bps to 6.3%. Thus OP grew 59% to Rs 108.10 crore.

Other income fell 65% to Rs 19.34 crore. As interest cost went up 22% to Rs 4.46 crore and depreciation fell 2% to Rs 31.41 crore, PBT went up 4% to Rs 91.57 crore.

Provision for taxation was up 28% to Rs 31.82 crore. Finally, PAT fell 5% to Rs 59.75 crore.

FY 2018 results

For FY 2018, sales fell 16% to Rs 2615.37 crore. OPM fell 180 bps to 6.5%. Thus OP fell 34% to Rs 169.86 crore.

PBT went down 37% to Rs 167.93 crore. PAT fell 37% to Rs 118.98 crore.

Segment results

For the quarter, sales of from the Manufacturing of Machinery Equipment Division grew 2% to Rs 263.72 crore and accounted for 25% of total. PBIT from the same fell 37% to Rs 28.70 crore and accounted for 49% of total.

For the quarter, sales from the EPC Division grew 93% to Rs 807.35 crore and accounted for 75% of total. PBIT from the same grew 289% to Rs 28.51 crore and accounted for 29% of total.

For the six months, sales of from the Manufacturing of Machinery Equipment Division grew 37% to Rs 593.62 crore and accounted for 32% of total. PBIT from the same grew 13% to Rs 68.57 crore and accounted for 59% of total.

For the six months, sales from the EPC Division grew 61% to Rs 1246.94 crore and accounted for 68% of total. PBIT from the same grew 68% to Rs 45.82 crore and accounted for 39% of total.

Other details

The company has been executing contracts to design, engineer, procure, construct, commission and deliver a Bio-Refinery project in the Philippines. There was manifestation of latent conditions leading to cost overrun and delay in completion of the project within the contractual delivery date. The company notified the customer that these risks were to their account under the contract. The customer issued directions to continue with the project and started paying the additional cost to the sub-contractors directly. The project is substantially complete. The customer, on 30th January 2018, however, invoked the Bank Guarantees amounting to about Rs 134 crore and wrongly terminated the contract, and also claimed damages.

The company has referred the dispute to Arbitration under the Singapore International Arbitration Centre (SIAC), as per contract with the customer

The legal advice is that the company has good prospect of success in proving its claims against the customer and accordingly no provision has been made in the books of accounts.

SIAC has constituted the Arbitral Tribunal. The Arbitration is likely to take about 12-15 months for completion. There is no other change till date.

Valuation

The scrip trades at Rs 5700.