Lakshmi Electrical Control System posted lower double-digit growth in bottom-line during the quarter despite the decline in sales coupled with the continued margin pressure. The Company net sales declined by 1% YoY in Q4'FY 12 to Rs 38.37 crore.

Also, The Company fared badly on operating front, as the margins fell to lower single digit (by sharp 520 bps YoY 5.1%) due to sharp rise in material costs and accordingly there was 51% fall in operating profit to Rs 1.96 crore. But after the sharp rise in other income coupled with lower interest cost and depreciation, PBT before EO fell by 34% to Rs 1.77 crore. After adjusting for lower EO losses (Rs 0.13 crore vis-à-vis 1.01 crore) during the quarter, PBT declined by just 1% to Rs 1.64 crore. Thanks to the sharp fall in effective tax rate (over 1020 bps YoY to 16.3%) there was 13% growth in net profit to Rs 1.37 crore.

For the full year, Net sales grew by 12% YoY to Rs 163.73 crore and net profit grew 15% to Rs 10.36 crore. There was growth in bottom-line despite the margin pressure due to EO gain coupled with the lower effective tax rate during the year. Also, the sharp rise in other income coupled with lower interest cost and depreciation has negated the margin pressure to some extent.

Quarterly Performance:

Net sales declined by 1% YoY to Rs 38.37 crore for the quarter ended March 2012. The decline was due to sluggish 1% growth in core Electricals (91% of sales) to Rs 34.84 crore coupled with 20% fall in Plastics business (9% of sales) to Rs 3.45 crore. Also, there was 18% fall in Wind Power Generation business to Rs 0.11 crore. Notably, margins fell by 520 bps YoY to 5.1% on the back of sharp rise in material cost (460 bps YoY) coupled with the increase in staff cost (80 bps YoY) as percentage to sales and net of stock adjustments. Accordingly, there was 51% fall in operating profit to Rs 1.96 crore. But after the sharp 292% growth in other income to Rs 0.68 crore, PBIDT fall was limited to 37% YoY to Rs 2.64 crore.

At Segment level, margins from the Electrical business fell by sharp 370 bps YoY to 4.2% and accordingly there was 46% fall in the segment profit to Rs 1.45 crore. However, the Plastic business posted Rs 0.02 crore profit as against Rs 0.05 crore loss in the corresponding previous period. Further, Wind Power Generation business segment loss grew by 48% YoY to Rs 0.50 crore.

After the 95% fall in interest cost to Rs 0.01 crore and 34% decline in depreciation to Rs 0.85 crore, PBT before EO fell by 34% to Rs 1.77 crore. Further, after adjusting to the lower EO loss Rs 0.13 crore during the quarter (as against Rs 1.01 crore), PBT fall moderated to mere 1% to Rs 1.64 crore. Also, thanks to the sharp fall in effective tax rate by 1020 bps YoY to 16.3% there was 13% growth in net profit to Rs 1.37 crore.

Yearly Performance:

Net sales grew by 12% YoY to Rs 163.73 crore for the year ended March 2012. The growth in sales was driven by good growth from Core Electricals (13%), Plastics (8%) businesses coupled with sharp growth from the Wind Power Generation (48%) business. However, margins fell by 450 bps YoY to 9% and this led to 25% fall in operating profit to Rs 14.84 crore. But after the sharp 121% growth in other income, PBIDT fall limited to 19% YoY to 16.94 crore.

Consequent to the 98% fall in interest cost to Rs 0.02 crore coupled with the 28% decline in depreciation to Rs 3.77 crore, PBT before EO fall limited to 10% YoY to Rs 13.15 crore. After adjusting to the EO gain Rs 1.86 crore (as against Rs 0.93 crore EO loss), PBT grew by 10% to Rs 15.01 crore. Further, after the fall in effective tax rate by 320 bps YoY to 30.9% there was 15% growth in net profit to Rs 10.36 crore.

Other Information:

• The scrip was down by 1.15% to Rs 219.40 at BSE, India on 25^th May 2012.
• The Company recommended a dividend of Rs. 5/- per equity share of Rs. 10/- for the year ended 31^st March 2012.

Lakshmi Electrical Control System: Financial Results

Lakshmi Electrical Control System - Segment Results