Praj Industries, the global ethanol & brewery technology major on a flat standalone sales of Rs 163.93 crore (up 0%) has reported a 12% fall in its earnings (to Rs 12.06 crore)for the quarter ended June 2012.

• In a typical weak first quarter, the sales for the quarter was flat at Rs 163.93 crore. The value of production was lower by 9% to Rs 163.20 crore.

• Operating margin contracted by 50 bps to 7.7% on year on year basis and on sequential basis it was lower by 130 bps from 9% in Q4FY12. Apart from product/project mix, the contraction in margin is largely to do with higher staff and other expenses.

• The staff cost as proportion to sales was higher by 350 bps to 15% and that of other expense was up by 420 bps to 22.7%. Though material cost was lower by 780 bps to 54.6% on lower production that was not good enough to fully offset the sharp jump in other cost heads thereby leaving the margin to contract. Higher staff cost seems largely on account of annual incentives/bonuses.

• Other income was lower by 8% to Rs 4.06 crore. The interest cost was Rs 0.33 crore compared to nil in the corresponding previous period. The depreciation was higher by 16% to Rs 3.30 crore. Thus PBT before EO & forex loss/ gain was lower by 13% to Rs 13.07 crore.

• Forex loss for the quarter was lower by 13% to Rs 1.95 crore. Thus the PBT after forex loss was Rs 15.02 crore, a fall of 13%. The EO for the quarter was nil for the quarter as well as corresponding previous quarter.

• The taxation was lower by 18% to Rs 2.96 crore with no additional provisioning in Q1FY13 on account of IT proceedings. Thus the PAT was lower by 12% to Rs 12.06 crore. The company provided Rs 25 crore of additional provision on prudent note towards any potential liability in sequential previous quarter i.e. Q4FY12.

Consolidated revenue for the quarter was higher by 7% to Rs 204.58 crore and the PAT was lower by 5% to Rs 13.69 crore. On deducting from consolidated revenue & PAT, standalone figures to get the performance of the subsidiaries, the subsidiaries have registered a aggregate sales of Rs 40.65 crore (up 58%) and PAT of Rs 1.63 crore (up 133%). As regards the sharp jump in aggregate sales and profit of subsidiaries, the acquisition of Neela Systems, done in Jan 2012 has benefited the company boosting the consolidated sales and profits. Since the consolidated financials of corresponding previous quarter does not include the figures of Neela Systems the performance of consolidated Q1FY13 figures are not comparable with that of corresponding previous period.

Annual performance

Standalone sales were up by 59%yoy to Rs 880.86 crore. With OPM expand by 180 bps to 9.8% the operating profit was higher by 94% to Rs 86.35 crore. The PBT before forex loss has more than doubled (up by 106% to Rs 114.85 crore), after accounting for OI, interest and depreciation. The forex loss was Rs 2.93 crore (compared to a gain of Rs 4.25 crore in corresponding previous period). Thus on inflated base, the PBT before EO but after forex loss was higher by 87% to Rs 111.92 crore. The EO for the half year as well as corresponding previous period was nil. Taxation in absolute terms was higher by 613% to Rs 46.10 crore on account of additional provision of Rs 25 crore in relation to proceedings u/s 133 of IT Act by the IT department. Thus the growth at PAT level eventually limited to 23% to Rs 65.82 crore.

Consolidated sales was up by 50% to Rs 1003.53 crore and the operating profit was up by 93% to Rs 96.28 crore with jump in OPM to 9.6% compared to 7.5% in corresponding previous period. Eventually the net profit after minority interest was up by 18% to Rs 67.90 crore. The Consolidated results for the year ended as on March 31, 2012, include, Turnover of Rs 31.10 crore and PAT of Rs 2.31 crore (that is turnover and PAT from the date of acquisition, namely 6th January 2012) in respect of Neela Systems.

Other Developments

The consolidated order backlog as on date is Rs 800 crore with order intake in Q1FY13 being Rs 165 crore.

The share buy back scheme of the company which commenced effective from Dec 26, 2011 got completed on April 24, 2012.

Promoter share holding as end of June 2012 stood at Rs 29.14%

The stock price hovers around Rs 57.30.

 Praj Industries: Results