Alstom T&D, the MNC transmission and distribution equipment major registered 17% fall in its standalone sales for the quarter ended Dec 2015 to Rs 755.29 crore. But a whopping 1020 bps contraction in operating margin dragged the operating profit down by 90% to Rs 10.25 crore. Hurt further by higher interest and depreciation the PBT was a loss of Rs 28.04 crore compared to a profit of Rs 28.04 crore in the corresponding previous period. The taxation was a write back of RS 9.83 crore compared to a provision of Rs 22.82 crore in the corresponding previous period. Eventually at bottom-line it was a net loss of Rs 18.21 crore compared to a profit of Rs 46.27 crore in the corresponding previous period.
- Operational income excluding other operating income was lower by 18% to Rs 743.62 crore. But the value of production for quarter was down by 19% to Rs 797.89 crore. Sales lower than value of products reflects delay in delivery or inventory built up which will get liquidated in coming months. Lower sale is largely due to delay in despatches on account of Chennai floods as the operations in the two plants in the city got disturbed.
- Operating margin contracted by whopping 1020 bps to 1.4% compared to 11.6% in the corresponding previous period. Sharp contraction in OPM can be attributed to increase in all expenses heads. Material cost, which as a proportion to sales net of stocks was up by 200 bps to 69.5%. Similarly staff cost was up by 170 bps (to 11.5%) and that of other expenses stood higher by 560 bps (to 17.7%). Thus hit by lower sales and crash in OPM, the operating profit was down by steep 90% (to Rs 10.25 crore). Escalation in expenses is largely due to impact of Chennai sales on sales and operation as well as higher material/expenses in some contracts.
- Other income was lower by 100% to Rs 0.00 crore. The interest cost was lower by 18% to Rs 16.78 crore. The depreciation was flat at Rs 21.51 crore. Thus at PBT level it was a loss of Rs 28.04 crore compared to a profit of Rs 69.09 crore in the corresponding previous period.
- EO income for the quarter as well as corresponding previous period was nil. The tax incidence for the quarter was a write back of Rs 9.83 crore compared to a provision of Rs 46.27 crore in the corresponding previous period. Thus at PAT level it was a loss of Rs 18.21 crore compared to a profit of Rs 46.27 crore in the corresponding previous period.
Nine month performance
Sales were up by 5% to Rs 2472.10 crore. With 180 bps contraction in OPM the operating profit was lower by 16% to Rs 177.57 crore. After accounting for lower other income, lower interest cost, higher depreciation and lower taxation, the net profit was eventually down by 28% to Rs 47.64 crore.
Order book
Order book as end of Dec 31, 2015 stood at Rs 7904.3 crore (down 6%yoy) compared to Rs 7842.1 crore as end of Sep 30, 2015.
Management Comment
Rathin Basu, Manging Director of Alstom T&D India said, "The market continues to be difficult due to lack of new investments from private sector and increasing bank NPAs which impact the cash flows from the customers. The announcement of "UDAY" scheme for discoms is positive news which, hopefully, would result in better cash flows and new investments in state T&D networks and eventually in the IPPs in the future. We had a difficult quarter due to delayed sales impacted by Chennai flood and higher material costs/expenses in some contracts as well. We continue to lead the market and our backlog continues to be at a good level."
Other developments
GE indirectly acquired Alstom T&D India as a part of its global acquisition of Energy business activities of ALSTOM on November 2, 2015. Until further update, Alstom T&D India will continue to operate under the name of Alstom T&D India.
The stock hovers around Rs 394.50.
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