Sterling Tools

Sharp downtrend

Feb 15, 2020 11:02 IST capital market

Sterling Tools registered 31% fall in sales for the quarter ended Dec 2019 to Rs 84.86 crore. However with 200 bps expansion in operating profit margin, the fall at operating profit was restricted at 22% to Rs 13.94 crore. With other income (OI) stand higher by 31% to Rs 1.44 crore, the fall at PBIDT further moderated to stand at 19% to Rs 15.38 crore. However with 177% jump in interest cost and 34% increase in depreciation, the PBT was down by 47% to Rs 7.11 crore. With taxation stand lower by 58% to Rs 2.19 crore, the PAT was down by 40% to Rs 4.92 crore.
  • Value of production for the period was down by 39% to Rs 83.58 crore(from Rs 136.66 crore in the corresponding previous period) even while the sales was down by 31% to Rs 84.86 crore. Sale for the quarter was 1.02 times higher than value of production but the sales for corresponding previous period was 0.90 times of its value of production. Sales higher than value of production for the quarter reflects liquidation of earlier period stocks.
  • Lower OPM by 200 bps to 16.4% was largely due to fall in all cost heads barring staff and Power & Fuel cost. Material cost as % of sales net of stocks was down by 800 bps to 36.3%. Similarly the cost of stores consumption was down by 70 bps to 7.4% and that of OE was down by 20 bps to 20.1%. However, the staff cost was up by 470 bps to 11.4% and the Power cost was up by 60 bps to 8.2%.
  • Other income was up by 31% to Rs 1.44 crore. The interest cost was up by 177% to Rs 1.79 crore and the depreciation was up by 34% to Rs 6.48 crore. Thus the PBT was down by 47% to Rs 7.11 crore.
  • The tax rate was lower at 30.8% compared to 38.5% in the corresponding previous period. And thus PAT was down by 40% to Rs 4.92 crore.  

Nine month performance

Sales was down by 29% to Rs 278.41 crore and the with 80 bps contraction in OPM to 16.9%, the operating profit was down by 33% to Rs 47.08 crore. After accounting for higher OI, higher interest and higher depreciation the PBT was down by 49% to Rs 29.77 crore. With taxation stand lower by 57% to Rs 8.90 crore, the PAT was down by 44% to Rs 20.87 crore.

Forms JV with Chinese company for manufacture of MCUs for EV

On Dec 23, 2019 the company announced that it has entered into a Joint Venture (JV) Agreement with Jiangsu Gtake Electric Company Limited, a China based Company. The two companies have agreed to join hands to provide the Indian Electric Vehicle OEMs with best in class MCUs (motor control units). The agreement calls for the companies to manufacture MCUs domestically to cater to the Indian automotive market by developing local design engineering, application support and after sales service capabilities as per the requirements of the Indian industry.

Equity sharing ratio is 51%:44%. The Proposed Joint Venture Company would be a subsidiary of Sterling Tools.

GTAKE is an R&D led organization and 40% of its workforce is engaged in the function. The company was incorporated in 2009 and has a dominant market share for MCUs in China. Its customers include Kinglong, Yutong, and Dongfeng&Zhongtong. GTAKE product range covers MCUs for motors from 1 ? 200kW (rated) and from 48? 750V. The company has developed several unique products that integrate additional powertrain functionality. GTAKE controllers optimize torque characteristics and efficiencies of electric motors over wide operating conditions.

Other developments

BoD on its meeting on Feb 14, 2019 has appointed/designated Atul Aggarwal, a whole time director of the company as Chief Financial Officer of the company w.e.f. Feb 14, 2020. This is on account of Narayan Vijay Gopal, who resigned from the post of Chief Financial Officer w.e.f. Dec 31, 2019 due to his personal reason.

The Board of Directors earlier on their meeting on Nov 14, 2019 has deferred the decision on the proposal for merging Haryana Ispat, a private limited company and wholly owned subsidiary of the company with itself (Sterling Tools).

Sterling Tools : Standalone Results

 

1912 (3) 1812 (3) Var. (%) 1912 (9) 1812 (9) Var. (%) 1903 (12) 1803 (12) Var. (%)
Sales 84.86 123.28 -31 278.41 393.91 -29 512.20 452.91 13
OPM (%) 16.4 14.4 16.9 17.7 16.8 20.0
OP 13.94 17.81 -22 47.08 69.76 -33 85.94 90.68 -5
Other inc. 1.44 1.10 31 4.83 4.64 4 6.36 5.62 13
PBIDT 15.38 18.91 -19 51.91 74.41 -30 92.30 96.30 -4
Interest 1.79 0.65 177 4.47 2.07 116 3.66 3.78 -3
PBDT 13.59 18.26 -26 47.44 72.34 -34 88.64 92.52 -4
Dep. 6.48 4.83 34 17.66 14.01 26 19.05 17.59 8
PBT 7.11 13.44 -47 29.77 58.33 -49 69.59 74.93 -7
EO Exp 0.00 0.00 0.00 0.00 0.00 0.00
PBT after EO 7.11 13.44 -47 29.77 58.33 -49 69.59 74.93 -7
Taxation 2.19 5.17 -58 8.90 20.82 -57 24.73 26.27 -6
PAT 4.92 8.27 -40 20.87 37.51 -44 44.86 48.66 -8
EPS (Rs)* # # # # 12.5 13.5
* EPS is on current equity of Rs 7.2048 crore, Face value of Rs2
# EPS is not annualised due to seasonality of business
Figures in Rs crore
Source: Capitaline Corporate Database

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