From what I recollect from the concall,
- Company exceeded their KPI targets set by the parent, making them eligible for more than 100 % bonus. Since provision is made only for 100 % bonus at the start of the year, balance provision for entire 9 month period was made in Q3, leading to higher employee costs. This creates a one-time bump in Q3 which will not recur in future quarters.
- Interest cost is higher due to adverse movement of the EUR to INR exchange rate. But this is a fully hedged loan and hence the excess will be reversed in future over the tenure of the loan.
- There was a workers’ strike in one of the factories. However, the management held their ground and after 9 days, the workers resumed work unconditionally. But 9 days production was lost in the process. Now the relations with the workers union are cordial.
- Company held back shipments to a customer who was delaying payments, leading to 5 % lower sales. The customer has now started making payments on time and shipments have resumed.
Thus, though the gross margins have improved, all of the above have led to lower EBIDTA and net margins. But as we can see, all the above are one offs which will hopefully not recur or get reversed in future.
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