• The sale was down by 3% to Rs 171.39 crore. But the value of production for the period was up by 2% to Rs 178.38 crore. The sales were 0.96 times of value of production compared to 1.01 times in corresponding previous period. Sales lower than value of production reflects inventory build-up which will get liquidated in coming quarters.
• Operating margin for the quarter eroded by 240 bps to 15.4%. Lower OPM for the period was largely due to share rise in staff and OE. The material cost (including cost of traded goods) as proportion to sales net of stocks was lower by 30 bps to 55.1%. But the staff cost was up by 210 bps to 18.3% and Other Exp was up by 150 bps to 11.9%. Hit thus by marginal fall in sales and strong 240 bps erosion in OPM, the OP was down by 17% to Rs 26.31 crore.
• Other income was lower by 3% to Rs 6.90 crore and the interest cost was higher by 786% to Rs 0.62 crore. The depreciation was higher by 71% to Rs 4.80 crore. Thus the PBT before EO was lower by 22% to Rs 27.79 crore. EO for the quarter as well as corresponding previous period was nil.
• The taxation in absolute terms was lower by 62% to Rs 5.07 crore and the tax rate was lower at 18.2% compared to 37.3% in the corresponding previous period. Sharp fall in taxation is due to the company opt for reduced corporate tax as per the recent ordinance. Thus, gained the PAT was higher by 1% to Rs 22.72 crore.

Half yearly performance

Sales were higher by 7% to Rs 362.55 crore and the operating profit was lower by 1% (to Rs 53.50 crore) hit by 110 bps contraction in OPM to 14.8%. After accounting for lower OI, higher interest and depreciation, the PBT was down by 16% to Rs 57.22 crore. Eventually the PAT was down by 3% to Rs 41.78 crore, despite taxation stand lower by 37% to Rs 15.44 crore.

Other developments

Ingersoll Rand plc, the ultimate holding company of Ingersoll Rand (India) and Gardner Denver Holding Inc (the acquirer) issued a joint press release on April 30, 2019, announcing to have entered into an arrangement which upon completion would entitle acquirer indirectly through its various subsidiaries, ability to exercise 74% of the voting share capital of the company and control which is currently held by Ingersoll Rand Company.

Citigroup Global Markets India, on behalf of Gardner Denver Holdings Inc and Cham Merger Sub Inc, a person acting in concert with acquirer has issued a public announcement on May 7, 2019 (public announcement) for acquisition of upto 6207660 fully paid equity shares from the public shareholders of the company constituting 25% of the fully diluted voting equity share capital of the company. The public announcement has been made in terms of the SEBI (substantial acquisition and takeover) Regulations 2011. The completion of the said acquisition is subject to certain conditions, including the receipt of regulatory clearances and approval in various jurisdiction and other customary conditions for the global transaction.

Interim Dividend

To pay an interim dividend of Rs 3 per equity share. The record date for the same is Nov 21, 2019.

The stock was hovering around Rs 624.15.