Sunil Pahilajani MD & CEO & Narayan Narasia CFO addr callHighlights by Capital Mkt
In September 2015 quarter, sales fell 4%to Rs 424.73 crore. Engines Division sales fell 4% to Rs 408.20 crore.While the revenue growth is still a concern on account of weak market conditions, various operational excellence initiatives have started yielding results and has been reflected in the EBITDA margins improvement.OPM jumped 510 basis points from 12.7% to 17.9% taking OP up 35% to Rs 75.97 crore.PBT grew 55% to Rs 75.42 crore. EO loss stood at Rs 1.85 crore against Rs 14.80 crore. PBT after EO soared 117% to Rs 73.57 crore. After providing for tax (up 195% to Rs 19.31 crore), PAT jumped 99% to Rs 54.26 crore.
For the six months ended September 2015, sales fell 7%to Rs 805.39 crore. For the six months, Engines Division sales fell 5% to Rs 778.34 crore.OPM jumped 520 basis points from 11.9% to 17.1% taking OP up 34% to Rs 138.11 crore.PBT grew 51% to Rs 133.71 crore. EO gains stood at Rs 5.54 crore against a loss of Rs 15.43 crore. Thus PBT after EO soared 90% to Rs 139.25 crore. After providing for tax (up 140% to Rs 41.65 crore), PAT jumped 74% to Rs 97.60 crore.
The company has show caused its modern 105 HP three cylinder, BS IV complaint, ‘ leap Engine’ for automotive applications at recent Society of Automotive Engineers – China Congress & Exhibition at Shanghai, China which offers attractive value proposition to its OEMs. This thrust on farm Equipment sector continues with launch of indigenized Mini Power Tiller and Paddy Weeder. The company can provide more such engines of different variants.These farmer friendly products are value for money and suitable for local soil condition.
The launch of Greaves Mini Power Tiller and Greaves Paddy Weeder is a testimony to its continuous efforts in innovation and product development.Its Farm Equipment Business is focused on transforming the lives of small & marginal farmers by enabling them to mechanize various farming practices backed with strong service network & easily availability of Spare Parts in rural markets at affordable prices. These machines are certified by Government of India as per the latest standards andare backed by Greaves cotton’s nationwide authorized dealer networks.The company has focused on few things. These include focus on genset business, farm equipment business, cost minimization and working capital improvement.Value engineering and other cost initiatives has helped the company in getting better margins. Benefit of lower commodity prices also has helped in improving the OPM.Going forward, commodity benefit will have to be passed on.Volumes for 3 wheeler was 80000 in September 2015 quarter (against 90000 y-o-y) and 4 wheeler was 10000 (10000) respectively.Pump business volume was 22000 in September 2015 quarter (against 25000 y-o-y) tiller was 1000 (against 2000).
Second half should be better than fist half in auto business.The company’s market share in 4 wheeler segment is around 85%. The company is in Small Commercial Vehicle (SCV) segment which is sub 1 ton vehicle. The company can offer solutions for 3.5 tons also.Auto business accounts for 55% of its sales.After Markets sales accounts of 18-19 of sales.In tax the company enjoys benefits for R&D spends so it is 26-27%.The company has Rs 100 crore capex.Utilisation is 75% in Auto Engines.Around 55% of sales come from Auto OEMs, 18-19% comes from After Market and rest comes from agri power generation.3 wheeler and 4 wheelers segments will get better for the OEM’s. This is what the company is hearing from the OEMs.Exports is 4% of sales and the company is hoping it to enhance it to 10% of sales in next 3 years.Price negotiations with the OEMs happen around twice a year.Volume wise second half is expected to be better than the first half.
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