• The value of production for the quarter was higher by 9% to Rs 92.85 crore even as the operating income (excluding other operating income) was up by 14% to Rs 89.51 crore. Sales for the quarter are 29.5% lower than value of production. In comparison the sales for the corresponding previous period was 61.6% lower than its respective value of production. The inventory built-up for the quarter is relatively lower than corresponding previous period.

• Sales including other operating income were higher by 12% to Rs 91.05 crore and of which share of export was 17.6%. Upside in revenue for the period was largely due to strong growth in revenue of industrial switchgear, building products, copper. However the segment revenue of energy management business (EM) stood lower as the revenue is largely from invoicing of O&M of the large project.

• Sale of industrial switchgear business was up by 5% to Rs 46.60 crore and that of copper was up by 24% to Rs 33.20 crore. But that of building products jumped up by 119% to Rs 7 crore. Contrarily the segment revenue of EM was down by 11% to Rs 5.80 crore.

• Operating profit margin contracted by 90 bps to 12.5% and this can be explained by higher material cost. Material cost as proportion to sales net of stocks was up by 102 bps to 72.1%. But the staff cost and OE was lower by 30 bps (to 4.9%) and 40 bps (to 11%) respectively. Operational expenses for the corresponding previous quarter ended Sep 2015 include onetime TDS expenses of Rs 0.46 crore on account of employee stock options. Moreover the just an O&M revenue in EM business have also impacted the margin.

• Other income jumped up by 775% to Rs 1.49 crore. The interest cost and depreciation was higher by 30% (to Rs 3.56 crore) and 24% (to Rs 2.43 crore). Thus the PBT was up by 9% to Rs 6.86 crore.

• Taxation in absolute terms was up by 12% to Rs 1.89 crore. And the tax rate too stood higher at 27.6% compared to 26.8% in corresponding previous quarter. Thus the growth at PAT was 7% to Rs 4.96 crore.

Half Yearly performance

Standalone sales were higher by 26% to Rs 172.09 crore. But with operating margin contract by 130 bps the operating profit was down by 5% to Rs 22.19 crore. After accounting for higher other income, higher interest and depreciation, the PBT was lower by 4% to Rs 12.63 crore. Taxation was lower by 10% to Rs 3.08 crore and thus the PAT was lower by 1% to Rs 9.55 crore.

Other developments

Amalgamation of Salzer Magnet Wires with Salzer Electronics – The Board has approved the Merger of Salzer Magnet wires with Salzer Electronic with approval of Draft Scheme of Amalgamation. Currently waiting for Approval from Honourable High Court of Judicature at Madras and Stock Exchanges.

Three Phase Dry Type Transformers – Trial Production to start in November 2016 and First Invoicing to start from December 2016

Management comment

R Doraiswamy, Joint Managing Director of the company commenting on the results said, "We have witnessed robust growth across all the key business of Industrial Switchgears, Copper Business and Building Segment. In our Energy Management Business revenues have come in purely from Operations & Maintenance. This business has a higher margin as compared to other business segments and will continue to give us Operations & Maintenance revenues in the coming quarters. Currently there are no new orders in this segment but we are very optimistic about the growth prospects of this business. I am happy to inform that this quarter we have been able to increase revenue share from our high margin Industrial Switchgears business. Contribution from higher margin products in this business has increased leading to better margins overall. We have also seen a good growth in the margins sequentially and expect this trend to continue. Going forward, we will continue to focus on adding new, niche and high margin products, enter new geography and offer total and customized electrical solutions to our existing and new customers."

The stock hovers around Rs 211.