Better productivity, control over input costs and other overheads translated in OP margin to 18.4%, up by 350 basis points. Higher dividend and interest income (company enjoys negative working capital) together with flat depreciation translated in PBT growth of 65% to Rs 14.51 crore and PAT growth of 9.56 crore, up by 66%.

Quarterly Performance

For the quarter ended June 09, Swaraj Engines has reported net sales growth of 14% to Rs 69.76 crore. The engine volumes of the company have increased by 20% to 9769 engines. The Operating Margins of the company has expanded by 350 bps to 18.4% resulting Operating Profit up by 41% to Rs 12.86 crore.

Raw material cost and other expenditure as a % to net sales (net of stock adjustment) is down by 160 basis point and 40 basis points to 76.2% and 2.5% respectively. The employee cost as a % to net sales (net of stock adjustment) was slightly higher by 20 basis points to 4.7%.

Higher dividend income and higher interest income resulted in other income of Rs 1.04 crore (Rs 0.04 crore for Sep'08) and interest income of Rs 1.80 crore (Rs 0.83 crore for Sep'08), up by 999% and 117% respectively.

Depreciation almost remained flat at Rs 1.19 crore as the company continued to utilize its surplus capacity without being required to incur any incremental capex. After providing tax of Rs 4.95 crore, up by 62%, PAT stood at Rs 9.56 crore, up by 66%.

Half yearly Performance

For half year ended Sep'09, the net sales were up by 23% to Rs 137.39 crore. Lower raw material cost, better productivity and economies of scale lead OP margin up by 280 basis points to 18.2% resulting in OP growth of46% to Rs 25.07 crore.

Higher dividend and interest income resulted in other income of Rs 2.89 crore (as against Rs 0.08 crore for half year ended Sep'08) and interest income of Rs 3.59 crore (as against Rs 1.72 crore for Sep'08). With flat depreciation of Rs 2.33 crore and tax of Rs 9.95 crore, PAT was up by 72% to Rs 9.95 crore.

Yearly Performance

For the year ended March 09, the topline of the company has surged by robust 66% to Rs 208.17 crore owing to increased engine supplies to Swaraj Tractors. On account of high raw material cost inventory, OPM was down by 320 bps to 15.3% and constrained growth in operating profit by 37% to Rs 31.87 crore. Further other income slipped by 6% to Rs 0.17 crore. PBT surged by 46% to Rs 32.22 crore thanks to healthy growth in its interest income and meager growth in its depreciation cost. Interest income has increased by 49% to Rs 4.87 crore, while the depreciation cost inched marginally by 2% to Rs 4.69 crore. With decline in effective tax rate by 90 bps to 34% net profit for the year stood high by 48% to Rs 21.28 crore.

Other Information

The promoters' shareholding stood unchanged at 50.6% for the quarter ended June 09. None of the share are pledged.

The Scrip is hovering at Rs 330 on BSE.