ISGEC Heavy Engineering registered 23% growth in consolidated sales for the quarter ended Sep 2019 to Rs 1430.54 crore. But with OPM expand by 110 bps to 5.5%, the operating profit leaped up by 52% to Rs 78.40 crore. However a 60% fall in other income has moderated the growth at PBIDT level at 31% to Rs 83.09 crore. With interest stand higher by 55% to Rs 8.18 crore and depreciation up by 19% to Rs 23.51 crore, the growth at PBT was 33% to Rs 51.40 crore. The taxation was lower by 56% to Rs 6.08 crore and thus the PAT was up by 84% to Rs 45.32 crore. With minority interest being a share of profit of Rs 0.09 crore (against a share of loss of Rs 1.67 crore in the corresponding previous period) the PAT was up by 72% to Rs 45.13 crore.
- Upside in revenue was largely driven by machinery & equipment manufacturing (M&E) as well as EPC business of the company. While the segment revenue of sugar was down by 23% to Rs 117.83 crore (or 8% of sales), the segment revenue of M&E was up by 50% to Rs 406.84 crore ( or 27% of sales) and that of EPC was up by 18% to Rs 958.47 crore (or 65% of sales).
- EBIT for the period was up by 18% to Rs 64.35 crore with upside coming from all the three business of the company. E&M, EPC and Sugar. Segment profit of E&M was up by 26% (to Rs 27.87 crore) driven largely by higher sales as its segment margin eroded by 130 bps to 6.9%. However the segment profit of EPC was up by 19% to Rs 34.11 crore facilitated by higher sales as well as marginal 10 bps expansion in segment margin to 3.6%. Despite lower sales the segment profit of sugar was up by 186% (to Rs 6.31 crore) driven largely by 390 bps expansion in its segment margin to 5.4%.
Half yearly performance
Consolidated sales was up by 26% to Rs 2624.98 crore but with OPM erode by 110 bps to 5.7%, the operating profit was up by just 6% to Rs 149.98 crore. The PBT was down by 10% to Rs 100.98 crore hit by lower OI, higher interest and higher depreciation. The EO was nil for the period as well as corresponding previous period.With taxation stand lower by 31% to Rs 27.46 crore, the PAT was flat (up 0%) to Rs 73.52 crore. With MI being share of profit of Rs 0.11 crore compared to a share of loss of Rs 0.62 crore in the corresponding previous period, the net profit (after MI) was down by 1% to Rs 73.41 crore.
Other developments
The Company elected to exercise the option permitted under Section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019. Accordingly, the Company has recognised Provision for Income Tax for the six months ended September 30, 2019and re-measured its Deferred Tax Assets on the basis of the rate prescribed in the said Section. The full impact of this change has been recognisedin the statement of Profit & Loss and Other Comprehensive Income for the quarter and six months ended September 30, 2019.
Update on Cavite Biofuels Producers: The Company was executing a contract to design, engineer, procure, construct, commission and deliver a Bio-Refinery project for M/s Cavite Biofuels Producers Inc., Philippines, (CBPI). A dispute arose and it was referred to the arbitration under the Singapore International Arbitration Centre (SIAC). The Company was in discussion with CBPI and its promoters to settle the arbitration out of court. In terms of settlement arrived with CBPI and its promoters, on October 3, 2019, the Company through its Wholly Owned Subsidiary Company, namely ISGEC Investments Pte. Ltd., Singapore, has acquired CBPI with its related assets and liabilities including bank loan of USD 35.8 million. The acquisition was done at a token consideration of USD 100. The Company proposes to sell CBPI with all its assets and bank liability and recover amounts due to it as well as amount taken by CBPI on invocation of Bank Guarantees.
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