Ram Ratna Wires, a company engaged in manufacture of enameled wires and strips has registered 26% fall in net profit to Rs 1.19 crore for the quarter ended December 2015. Strong fall in bottom-line is largely due to lower sales (down 7% to Rs 171.14 crore), 110 bps contraction in operating profit margin, higher interest and depreciation cost as proportion to operating profit even though they stood lower in absolute terms. But for lower taxation the de-growth in net profit would have been much higher than reported.

• The value of production for the quarter was lower by 12% to Rs 162.46 crore even while the sales (excluding other operating income) was down by 7% to Rs 167.72 crore. Sales higher than value of production is largely on account of liquidation of prior period inventory. Other operating income was higher by 27% to Rs 3.42 crore and thus the sales for the quarter was down by 7% to Rs 171.14 crore.
• Operating profit margin contracted by 110 bps to 3.8%. This can be explained by rise in cost at all cost heads barring material cost. Material cost as proportion to sales net of stocks was down by marginal 10 bps to 89.3%. But that of staff cost was up by 60 bps to 2.6%. The freight cost was up by 20 bps to 1.1%. Similarly the Power & Fuel stood higher by 10 bps to 1.9%. The other expenses stood flat at 1.2%.
• Other income was up by 313% to Rs 0.44 crore. The interest cost was down by 22% to Rs 3.27 crore. The depreciation was down by 9% to Rs 1.84 crore. But as proportion to operating profit, both interest and depreciation stood higher at 50% and 28.1% compared to 47% and 22.7% in corresponding previous period. Thus the PBT was down by 33% to Rs 1.87 crore.
• Taxation was down by 43% to Rs 0.68 crore and the tax rate was down at 36.6% compared to 42.7% in corresponding previous quarter. Thus the de-growth at PAT moderated and stood at 26% to Rs 1.19 crore.

Nine month performance

Standalone sales were lower by 5% to Rs 537.98 crore. But with operating margin contract by 100 bps the operating profit stood lower by 24% to Rs 22.35 crore. After accounting for lower other income, lower interest and lower depreciation the PBT was lower by 41% to Rs 7.60 crore. Taxation in absolute term was lower by 42% to Rs 2.74 crore. Thus the PAT was lower by 41% to Rs 4.86 crore. Finally the net profit was down by 40% to Rs 4.89 crore as the PPT was a write back of Rs 0.03 crore as against expense of Rs 0.01 crore in the corresponding previous period.