The Telegraph
Since 1st March, 1999
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Result Analysis


Bharat Earth Movers Limited (BEML), which falls under the purview of the ministry of defence, is in the business of assembling and selling earth moving equipment as well as products for the defense sector. Its performance last fiscal, which seems to be stupendous given the 261 per cent rise in net profit, is actually a product of a huge spurt in other income and a drastic reduction in the interest and depreciation provisioning. At the operating level the company has performed badly with net sale moving up by 18 per cent to Rs 1,675.92 crore (Rs 1,421.00 crore). The OPM has devolved to a measly half a per cent from 3 per cent during the same period last year. Other income, which has been the sole consolation of an otherwise poor performance, was up by a good 256 per cent over the year-ago period to Rs 47.18 crore (Rs 13.26 crore) and further consolidation came from a 88 per cent decrease in the interest cost which stood at Rs 3.19 crore (Rs 26.32 crore). Depreciation too was down 10 per cent over the same period previous year at Rs 19.68 crore (Rs 21.92 crore). With a 71 per cent increase in the tax provision for the year net profit stood at Rs 18.76 crore (Rs 5.20 crore),up by a massive 261 per cent over the corresponding period. The stock currently trades at Rs 91.50 discounting its full year EPS of Rs 5.11 by 18 times.


Henkel Spic India Limited, a fast moving consumer goods company, for the first quarter ended March, 2003, reported a 3 per cent decline in net sales and operational spending sinking margins badly. Net sales of the company at Rs 73.95 crore during the reporting quarter was down 3 per cent from Rs 76.63 crore reported in the corresponding previous quarter. While the compnay’s operational cost came down to Rs 70.39 crore (Rs 72.31 crore) leading to a 18 per cent decline in the operating profit at Rs 3.56 crore compared with Rs 4.32 crore in the previous quarter. The OPM shrank to 5 per cent from 6 per cent during the same period last financial year. Other income was negligible. While interest at Rs 1.52 crore (Rs 2.15 crore) was down 29 per cent from the year-ago period. Depreciation at Rs 1.56 crore was up 11 per cent from Rs 1.41 crore reported in the corresponding previous quarter. The general sluggishness of the fast moving consumer goods industry, which has not spared the best and biggest names in the sector, hit Henkel Spic too. Despite costs coming down and no tax provision it reported a 36 per cent decline in net profit during the preiod under review at Rs 0.52 crore (Rs 0.81 crore). The stock currently trades at Rs 22.


Bata India is slipping on performance but, in contrast, the stock has more than doubled in the past month. Its first quarter net sales at Rs 143.32 crore (Rs 132.87 crore) was up 8 per cent. Sequentially, the same was down 16 per cent from the December quarter sale of Rs 169.76 crore. Operational costs went up by 7 per cent over the same period last year to Rs 144.91 crore (Rs 134.82 crore). The operating cost was down 12 per cent sequentially. Lower revenues compared with costs have seen Bata report an operating loss of Rs 1.59 crore for the quarter, lower than the Rs 1.95 crore loss it reported last year. Other income at Rs 0.68 crore is much lower at Rs 3.15 crore compared with the corresponding previous quarter but slightly higher than the December quarter income of Rs 0.45 crore. Interest cost went up by 2 per cent over the year-ago period (11 per cent sequentially) to Rs 2.13 crore (Rs 2.09 crore) while depreciation too went up by 6 per cent (26 per cent sequentially). Bata has reported a loss of Rs.6.57 crore (Rs.4.22 crore).


Rising competition from smaller regional players and a general saturation of the tea market has hit Tata Tea’s performance in 2002-03. At Rs 760.75 crore (Rs 779.43 crore), income from operations was down 2 per cent. Operational costs too were brought down by 2 per cent over the previous year at Rs 678.45 crore (Rs 685.73 crore). Lower revenues have been the cause for shrinking margins for the second consecutive year. Operating profit was down 8 per cent at Rs.85.90 crore (Rs 93.70 crore), while OPM shrank by a percentage point to 11 per cent last year. Other income at Rs 51.24 crore (Rs 35.16 crore) was up 46 per cent, while interest was down 33 per cent at Rs 14.39 crore (Rs.21.39 crore). Tata Tea reported a net profit of Rs 70.60 crore (Rs 71.96 crore). The stock has seen a good rise since early January and currently trading at Rs 226 discounting its full year EPS of Rs 12.56 by 18 times. With a negative growth in profits and revenues currently it is not cheap.

Company        Net Sales       Net profit        Equity       O. Income       EPS*

BEML**       1675.92       18.76       36.75       47.18       5.11 Henkel Spic***       73.95       0.52       116.39       0.04       0.18 Bata India***       143.32       (6.57)       51.42       0.68       (5.11) Tata Tea**       760.75       70.60       70.60       51.24       12.56 n Figures in Rs crore; * annualised; ** full year, *** first quarter

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