• Sales excluding other operational income for the quarter was down by 10% to Rs 109.30 crore with the revenue of consumable down by 11% (to Rs 79.57 crore or 73% of sales) and that of equipment division was down by 9% (to Rs 29.73 crore or 27% of sales). Continued slowdown in key user industries such as automobiles and engineering sustains the lower demand for welding consumables and the lower capex in industrial sector especially automobiles, engineering etc also impacts the equipment sales. With other operational income lower by 41% (to Rs 1.77 crore) the overall operating income was lower by 11% (to Rs 111.07 crore).
• The operating margin for the quarter contracted by 380 bps to 9.6% on year on year comparison. Contraction in OPM for the quarter was largely on account of rise in all cost overheads (as % to sales) apart from other expenses. While material cost as proportion to sales net of stocks was higher by 150 bps to 56.7%, the purchase of finished goods was higher by 320 bps to 10.5% and staff cost was higher by 200 bps to 9.2%. On the other hand the other expense was lower by 250 bps to 14.2%. Thus lower sales and contraction in OPM together has resulted in 37% fall in operating profit to Rs 10.61 crore.
• Downside at PBIT level was largely on account of consumables. The segment profit of consumables was lower by 33% (to Rs 8.33 crore or 66% of PBIT) hurt by lower sales as well as 340 bps contraction in segment margin. On the other hand the despite lower sales, the segment profit of Equipment business was up by 9% (to Rs 4.33 crore or 34% of PBIT) with its segment margin expand by 240 bps to 14.6%.
• Other income was higher by 31% to Rs 12.52 crore. With interest cost being nil and the depreciation being lower by 5% to Rs 2.90 crore, the PBT was lower by 37% to Rs 9.62 crore. The tax rate was lower at 26.6% compared to 30.2% in corresponding previous period while the taxation in absolute term too was down by 44% (to Rs 2.56 crore). And thus the net profit was lower by 33% to Rs 7.06 crore.

Yearly performance

Sales was lower by 13% to Rs 435.55 crore and the operating profit was lower by 15% with OPM contract by 20 bps to 11.9%. After accounting for higher other income (up 38% to Rs 7.09 crore), nil interest outgo, lower depreciation (down 5% to Rs 11.23 crore), the PBT was lower by 12% to Rs 47.48 crore. Eventually the PAT was lower by 12% to Rs 33.12 crore after accounting for lower taxation.

Other developments

To pay a dividend of 10% (or Rs 1 per equity share of Rs 10 face value) for fiscal ended Dec 2013 subject to shareholders approval in ensuing AGM.

The scrip hovers around Rs 481.75.