Elaborating on this – The MD mentioned that they have a clause in their contracts with customers (not all customers but only major ones) called “Material Guarantee”. As per this contract if the price of raw material shoots up then this is reimbursed from the customer. However there is a delay between incurring of expense and reimbursement. The reimbursement happens only once at the end of the year, whereas the expenses have to be booked as and when they happen. So while the margins for Q4 look low, there is not material reduction in margin. There is just a delay in recovering some extra expenses.
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