Capitaline

Results 03-May-22

Analysis

Elecon Engineering Company

Net up 46% thanks to lower interest, dep and tax

Consolidated net sales (including other operating income) of Elecon Engineering Company for the quarter ended Mar 2022 has declined 6% to Rs 329.74 crore. Operating profit margin has declined from 21% to 20.8%, leading to 7% decline in operating profit to Rs 68.55 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 44.25% to 48.80%. Employee cost decreased from 10.53% to 10.43%. Other expenses fell from 23.01% to 20.04%. Other direct service cost fell from 6.36% to 6.04%.

Other income rose 293.88% to Rs 3.86 crore. PBIDT fell 2.82% to Rs 72.41 crore. Provision for interest fell 49.31% to Rs 7.32 crore. PBDT rose 8.36% to Rs 65.08 crore. Provision for depreciation fell 8.02% to Rs 11.92 crore. Profit before tax grew 12.87% to Rs 53.16 crore. Provision for tax was expense of Rs 6.26 crore, compared to Rs 15.21 crore. PAT was up 47% to Rs 46.91 crore. PPT was up 310% to Rs 1.23 crore. Share of profit/loss was 1,475% higher at Rs 0.63 crore.Minority interest was nil in both the periods. Net profit attributable to owners of the company increased 46% to Rs 46.30 crore.

Sales of Material Handling Equipment segment has gone down 33.66% to Rs 36.68 crore (accounting for 11.12% of total sales). Sales of Transmission Equipment segment has gone down 0.61% to Rs 293.06 crore (accounting for 88.88% of total sales).

Profit before interest, tax and other unallocable items (PBIT) has slumped 2.94% to Rs 61.68 crore. PBIT of Material Handling Equipment reported profit of Rs 0.75 crore compared to loss of Rs 15.08 crore. PBIT of Transmission Equipment segment fell 22.51% to Rs 60.93 crore (accounting for 98.78% of total PBIT).

PBIT margin of Material Handling Equipment segment rose from negative 27.28% to 2.05%. PBIT margin of Transmission Equipment segment fell from 26.67% to 20.79%. Overall PBIT margin rose from 18.15% to 18.71%.

During the quarter, overseas business under Benzlers and Radicon registered revenue of Rs. 86.8 Crores with EBITDA of Rs. 18.2 Crores.

Yearly performance

Consolidated net sales (including other operating income) of Elecon Engineering Company has increased 15.20% to Rs 1203.55 crore. Sales of Material Handling Equipment segment has gone down 2.77% to Rs 135.38 crore (accounting for 11.25% of total sales). Sales of Transmission Equipment segment has gone up 18.00% to Rs 1,068.17 crore (accounting for 88.75% of total sales).

Profit before interest, tax and other unallocable items (PBIT) has jumped 44.54% to Rs 210.42 crore. PBIT of Material Handling Equipment segment rose 98.74% to Rs -0.63 crore (accounting for -0.30% of total PBIT). PBIT of Transmission Equipment segment rose 7.67% to Rs 211.05 crore (accounting for 100.30% of total PBIT).

PBIT margin of Material Handling Equipment segment rose from negative 36.22% to negative 0.47%. PBIT margin of Transmission Equipment segment fell from 21.65% to 19.76%. Overall PBIT margin rose from 13.94% to 17.48%.

Operating profit margin has jumped from 17.77% to 20.48%, leading to 32.77% rise in operating profit to Rs 246.44 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 43.98% to 49.02%. Employee cost decreased from 11.81% to 10.34%. Other expenses fell from 25.62% to 20.75%. Other direct service cost fell from 7.69% to 6.55%. Other income rose 49.39% to Rs 8.56 crore. PBIDT rose 33.27% to Rs 255 crore. Provision for interest fell 37.57% to Rs 37.34 crore. PBDT rose 65.48% to Rs 217.66 crore. Provision for depreciation fell 6.77% to Rs 48.58 crore. Profit before tax grew 112.89% to Rs 169.08 crore. Provision for tax was expense of Rs 30.03 crore, compared to Rs 23.66 crore. Effective tax rate was 17.61% compared to 29.11%. Share of profit/loss was 22.99% lower at Rs 1.44 crore. Minority interest was nil in both the periods. Net profit attributable to owners of the company increased 143.78% to Rs 140.49 crore.

Management Comment

Commenting on the Company’s performance, Prayasvin Patel, CMD said “We are pleased to announce robust set of performance amid improving external environment and continual improvements in internal efficiency. The Gears segment continues to perform well on the back of strong demand environment leading to healthy order inflow from our end user industries which bodes well for the gears division. In the MHE division, performance is substantially improved post change in the business strategy. The Company has made a good progress on recovery and also closure of few legacy projects. As such we expect significant turnaround in the MHE division going forward due to our strategic business approach and focusing on profitability and liquidity.”

Other developments

Equity capital stood at Rs 22.44 crore as of 31 March 2022 to Rs 22.44 crore as of 31 March 2021. Per share face Value remained same at Rs 2.00.

Promoters’ stake was 59.26% as of 31 March 2022 ,compared to 59.20% as of 31 March 2021 . Promoters pledged stake was 11.28% as of 31 March 2022 ,compared to 23.49% as of 31 March 2021 .

Consolidated Loan funds declined from Rs 329.41 crore as of 31 March 2021 to Rs 151.20 crore as of 31 March 2022. Inventories rose to Rs 261.67 crore as of 31 March 2022 from Rs 250.22 crore as of 31 March 2021. Sundry debtors were lower at Rs 415.07 crore as of 31 March 2022 compared to Rs 507.74 crore as of 31 March 2021. Cash and bank balance declined from Rs 141.48 crore as of 31 March 2021 to Rs 112.13 crore as of 31 March 2022. Investments rose to Rs 54.05 crore as of 31 March 2022 from Rs 53.44 crore as of 31 March 2021 .

Fixed assets declined from Rs 633.13 crore as of 31 March 2021 to Rs 618.72 crore as of 31 March 2022. Intangible assets declined from Rs 125.10 crore to Rs 120.97 crore.

Cash flow from operating activities increased to Rs 250.04 crore for year ended March 2022 from Rs 248.03 crore for year ended March 2021. Cash flow used in acquiring fixed assets during the year ended March 2022 stood at Rs 48.56 crore, compared to Rs 3.97 crore during the year ended March 2021.

Debt in overseas entity is paid off during the year.

The Board of Directors has recommended Final Dividend of Rs. 1.00/- (i.e. 50%) and additionally Special Dividend of Rs. 0.40/- (i.e. 20%), to mark 70 years of Elecon Brand, which aggregates to Rs. 1.40/- (I.e. 70%) per Equity Share of Rs. 2/- each.

Elecon Engineering: Consolidated Results
	2203 (3)	2103 (3)	Var.(%)	2203 (12)	2103 (12)	Var. (%)
Sales	329.74	350.13	-6	1203.55	1044.71	15
OPM (%)	20.8	21.0		20.5	17.8
OP	68.55	73.51	-7	246.44	185.61	33
Other inc.	3.86	0.98	293	8.56	5.73	49
PBIDT	72.41	74.50	-3	255.00	191.34	33
Interest	7.32	14.44	-49	37.34	59.81	-38
PBDT	65.09	60.05	8	217.66	131.53	65
Dep.	11.92	12.96	-8	48.58	52.11	-7
PBT before EO	53.17	47.09	13	169.08	79.42	113
EO Exp	0.00	0.00		0.00	0.00
PBT after EO	53.17	47.09	13	169.08	79.42	113
Taxation	6.26	15.21	-59	28.80	23.36	PL
PAT	46.91	31.88	47	140.28	56.06	150
PPT	1.23	0.30	310	1.23	0.30
PAT after PPT	45.68	31.58	45	139.05	55.76	149
Share of Profit/(Loss) from Associates	0.63	0.04	999	1.44	1.87	-23
Minority Interest	0.00	0.00		0.00	0.00
Net profit	46.30	31.63	46	140.49	57.63	144
EPS (Rs)*	#	#		12.6	5.2
* EPS is on current equity of Rs 22.44 crore, Face value of Rs 2
# EPS is not annualised due to seasonality of business
Figures in Rs crore
Source: Capitaline Corporate Database

Elecon Engineering: Consolidated Segment Results
Particulars	% to total	2203 (3)	2103 (3)	Var. (%)	% to total	2203 (12)	2103 (12)	Var.(%)
Sales
Material Handling Equipment	11	36.68	55.28	-34	11	135.38	139.25	-3
Transmission Equipment	89	293.06	294.85	-1	89	1068.17	905.46	18
Total	100	329.74	350.13	-6	100	1203.55	1044.71	15
Less Inter segment revenue				####				####
Net sales		329.74	350.13	-6		1203.55	1044.71	15
PBIT
Material Handling Equipment	1	0.75	-15.08	LP	0	-0.63	-50.43	-99
Transmission Equipment	99	60.93	78.63	-23	100	211.05	196.01	8
Total	100	61.68	63.55	-3	100	210.42	145.58	45
Less: Interest (net)		7.32	14.44	-49		37.34	59.81	-38
Less: Others Un-allocable Exp/Income (net)		0.56	1.98	-72		2.55	4.48	-43
Add: EO
PBT		53.80	47.13	14		170.53	81.29	110
Note: Figures in Rs crore
Source: Capitaline 2000

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