Top 895 companies increase net sales, operating profits and net profits despite margin pressures

Contrary to the gloom and doom prevailing, a Moneylife aggregation of 895 companies shows surprisingly good results for the March quarter

A majority of the companies have reported their March quarter results; we now have the data of 895 companies in the Moneylife sample of 1,150 companies whose results have come out. At first glance, sales, for the final quarter of the 2011-12 fiscal, increased by 19%, year-on-year (y-o-y), to Rs10,68,167 crore. Operating profits has increased by 12%, y-o-y, to Rs1,60,068 crore while net profits increased even more, by 18%, y-o-y, to Rs99,039 crore. This is highly impressive since there has been a severe pressure on margins. An analysis of 895 companies saw margins have actually shrunk a bit, on a y-o-y basis, at 9.27%, when compared to 9.36% recorded last year. The margins have somewhat stabilised now instead of worsening, which is good news.

Out of the 895 companies that reported results, a whopping 72.29% of the companies saw their fourth quarter sales increase over the corresponding period last year. While cost pressures continue to remain, the largest of the companies have managed to increase sales, operating profit as well as net profit, which is a positive sign of the Indian economy ability to withstand difficult times.

As many as 38% (343 companies) of the sample actually recorded higher net profit margin over last year's March quarter. The aggregate results have been somewhat skewed by the performance of a few larger companies. We will discuss the detailed performance once all the results of Moneylife sample, comes in.

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Public Interest Exclusive
MSRDC ‘doubtful’ of recovering Rs6.1 pending dues

The information was revealed after Pune-based activist Sanjay Shirodkar sought details from MSRDC on the sundry debtors/bad debts for 10 years along with the name of the party and the outstanding amount

Maharashtra State Road Development Corporation (MSRDC) is ‘doubtful’ of recovering Rs6.1 crore, of the total outstanding dues of Rs25.4 crore as of 31st March 2012, from toll collection centres, construction companies and other commercial entities, revealed a Right to Information (RTI) application. 

Pune-based RTI activist, Sanjay Shirodkar, sought information from MSRDC on the sundry debtors/bad debts for 10 years along with the name of the party and the outstanding amount.  

According to the RTI reply, of the total pending dues, Rs12.2 crore is by toll companies including Rs4.2 crore which is outstanding for more than six months. Some of them includes Thane Municipal Corporation for the toll station at LBS Road that has a pending dues of more than Rs93 lakh; Jai Bhavani toll station at Fursungi (Pune) has pending dues of about Rs1.07 crore; HB Pandhare, for toll station Ughadi, of Rs21.8 lakh; Balaji Enterprise toll station, at Pune-Jalgoan Road, is yet to pay its dues of around Rs23.8 lakh; while Senhship Construction for its toll station at Nakshatra Wadi (Aurangabad) owes Rs50.5 lakh to MSRDC. These dues are pending for the more than six months and MSRDC is doubtful of the recovery. 

The RTI reply also revealed that more than Rs23 crore is pending from other commercial entities. These includes Rs41 lakh from Adlabs Advertising at Airoli Toll Plaza, Rs63 lakh from Bharti Airtel, Rs4.2 lakh from Power Grid Corporation, Rs59 lakh from Reliance Communication, Rs2 crore from Rajdeep Publicity Pvt Ltd for advertising at Mahim and Rs59 lakh from The Deccan Retreat (Hotel Sanjgaon) among others. The pending dues from the commercial entities also include Rs10.8 crore from sundry debtors. However, no break-up for this was furnished in the RTI copy but MSDRC has mentioned that it is doubtful about the recovery of Rs1.5crore from sundry debtors. 

Speaking to Moneylife Mr Shirodkar said that, “I was wondering that only toll companies are connected to MSRDC, but here I could see lot of individuals as well as commercial parties as well. A recent report suggested that toll companies are earning 4% to 6% higher than their estimates. But the RTI query clearly shows that they are not paying their dues on time”

Moneylife reported that CRISIL Research, in its study of 23 of nearly 100 build-operate-transfer (BOT) toll road projects operational in the country, found that out of these projects, 17 are likely to earn equity returns higher than the typical equity return of 16% that developers target while bidding. Only three of the 23 projects are likely to record equity returns lower than 14%—project-specific factors such as delays and changes in engineering design have escalated the costs of these projects. http://www.moneylife.in/article/toll-companies-earning-4-to-6-higher-than-their-estimates/25987.html

 

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Economy & Nation Exclusive
V-Guard reports 70% higher Q4 net profit as it continues its growth trajectory

The electrical and electronic appliance maker has posted good results and plans to spend Rs25 crore on capex to expand capacities

V-Guard, the makers of electrical and electronic appliances, saw its net profit for the fourth quarter of the fiscal 2011-12 increase 70% to Rs19.17 crore over the corresponding period last year, excluding exceptional profits. Net sales for the quarter was Rs276.46 crore, a rise of 25%, from Rs222.35 crore recorded in the final quarter of the 2010-11.  The company’s net sales growth is below its average year-on-year (y-o-y) growth rate for the last three quarters, while its operating profit grew at an impressive 70%, which is a lot higher than its three quarter y-o-y average growth rate of 32%. It recently reached a new milestone of Rs1,000 crore turnover. 

The sales turnover of the company for the financial year 2011-12 was Rs1,006.53 crore, showing an increase of 36%, from Rs737.47crore it recorded in the previous fiscal. However, despite the vigorous expanding, its valuation remains somewhat subdued, at market-cap to operating profit of 4.37 times. This might sound quite undervalued considering the company has been making ambitious plans of expanding, over the last few years, as it tries to grow beyond its native home turf of Kerala.  Of course, there is a risk of losing steam while expanding too fast. Its return on networth stood at a healthy 30%. 

Mithun K Chittilappilly, managing director of the company said that margins for the quarter under review have improved mainly due to better product mix and cost control measures. He said that demand for all the product verticals were good and contributed to the robust sales growth. Margins were much higher in the company’s electrical department, with profit before tax (PBT) margins of 16.2% while its electronics segment recorded PBT margins of 8.3%.

Even though the company has increased its borrowings to Rs19.72 crore, up from a mere Rs2.63 crore, its debt-equity ratio is well under control, at 0.16 times. 

The company is planning to spend Rs25 crore as capex for the 2012-13 fiscal which includes doubling of its wire plant capacity at Kashipur. Meanwhile, the board of directors recommended a dividend of Rs3.50 per share, or 35% of its face value.

 

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