Depreciation jumped up by 39% to Rs 40.03 crore on a low base as the company in quarter ended Dec 2018 reviewed useful life of P&M and according working depreciation has been changed resulting in depreciation lower by Rs 11 crore in corresponding previous period.

Thus on inflated base, the PBT was down by 7% to Rs 67.30 crore. With taxation stand higher by 1% to Rs 17.20 crore, the PAT was down by 10% to Rs 50.10 crore. After accounting for higher minority interest (up 3% to Rs 1.62 crore) the net profit after MI was eventually down by 10% to Rs 48.48 crore.

But for inflated based due to lower depreciation in the corresponding previous quarter the net profit would have registered a growth rather than reported decline.

• Sales up by 6% to Rs 923.21 crore driven largely by 10% growth in volume for the quarter. Moreover upside in revenue was largely driven by growth in both polymer products as well as composite products. While the segment revenue of polymer was up by 6% to Rs 644.94 crore (or 70% of sales) that of composite products was up by 6% to Rs 278.26 crore (or 30% of sales).
• EBIT for the period was down by 4% to Rs 93.54 crore as both polymer products as well as composite products register fall in profits despite higher sales. Segment profit of polymer products was down by 4% (to Rs 65.13 crore) hurt by 100 bps contraction in segment margin to 10.1%. Similarly the segment profit of composite products was down by 3% to Rs 28.41 crore as its segment margin was down by 100 bps to 10.2%.
• In quarter ended Dec 2018 the company reviewed useful life of P&M and according working depreciation has been changed resulting in depreciation lower by Rs 11 crore in corresponding previous period to Rs 28.73 crore.In quarter ended Sep 2018 the depreciation was about Rs 39.7 crore. However as the company incur a capital expenditure of about Rs 106.5 crore in the last nine months leading to significant rise in depreciation on sequential basis since then. Thus on low base, the depreciation jumped up by 39% to Rs 40.03 crore.
• The PBT thus was down by 7% (to Rs 67.30 crore) on a base inflated by lower depreciation.

Nine month performance

Consolidated sales was up by 7% to Rs 2661.89 crore driven by 11% growth in volume with domestic volume up by 12% and overseas up by 11%. But with OPM stay flat at 14.3%, the operating profit was up by 8% to Rs 380.86 crore. After accounting for higher other income (up 53% to Rs 1.30 crore, the PBIDT was up by 8% to Rs 382.16 crore. The interest cost was higher by 15% to Rs 82.24 crore and thus the PBDT was up by 6% to Rs 299.91 crore. The PBT was up by 3% to Rs 180.66 crore after accounting for higher depreciation which was up by 11% to Rs 119.25 crore on deflated base as the company reviewed in useful life of P&M in quarter ended Dec 2018. With taxation stand higher by 7% to Rs 45.94 crore, the growth at PAT was restricted at 2% to Rs 134.72 crore. After accounting for higher MI, the PAT (after MI) was eventually higher by just 1% to Rs 130.83 crore.

The share of value added products stood at 20.4% in 9mFY20 compared to 19.7% in corresponding previous period.  

Other developments

Pursuant to the taxation law (Amendment) Ordinance 2019 issued by Ministry of Law and Justice (Legislative Department) on Sep 20, 2019, which is effective from April 1, 2019, domestic companies have the option to pay corporate income tax rate at 22% plus applicable surcharge and cess (new tax rate) subject to certain conditions. The company has made an assessment of the impact of the ordinance and decided to continue with the existing tax structure until utilisation of accumulated minimum alternate tax (MAT) credit.