MRPL: Continues to bleed - Views on News from Equitymaster

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MRPL: Continues to bleed

Feb 6, 2001

The turnover for the company has increased 20% for nine months ended December '00. This is due to the strong growth in sales in the previous two quarters. However, the decline in sales YoY for 3QFY01 could be due to the strong growth (30% QoQ) witnessed by the company in 3QFY00.

(Rs m) 3QFY00 3QFY01 Change 9m FY00 9m FY01 Change
Sales 9,421 8,762 -7.0% 22,636 27,085 19.7%
Other Income 139 56 -59.8% 182 116 -36.5%
Expenditure 9,282 8,547 -7.9% 22,221 26,314 18.4%
Operating Profit (EBDIT) 139 215 54.5% 415 771 85.9%
Operating Profit Margin (%) 1.5% 2.4% 1.8% 2.8%
Interest 485 471 -2.7% 2,153 1,839 -14.6%
Depreciation 357 379 6.0% 1,066 1,132 6.2%
Profit before Tax (563) (579) 2.8% (2,622) (2,084) -20.5%
Tax - - - -
Profit after Tax/(Loss) (563) (579) 2.8% (2,622) (2,084) -20.5%
Net profit margin (%) -6.0% -6.6% -11.6% -7.7%
No. of Shares (eoy) 792 792 792 792
Diluted Earnings per share* -2.8 -2.9 -4.1 -3.3
*(annualised)

The company's operating profits are up sharply. This is due to the 90 basis points improvement in OPM. The company is reported to have registered improved refining margins in the months of October and November.

Despite the improvement in margins the OPM continues to be lower than the industry average of 3.5%. This indicates that the operating expenses of the company are higher than its peer group. Another worrying factor is that the operating income of the company is insufficient to cover its debt servicing obligations. The could snow ball into an internal debt trap.

There seems to be no respite for the company's bottomline, which continues to be in the red. The company has mentioned its plans of roping in a new international partner to meet its expansion plans and overcome the current cash crunch. However, there seems to have been no progress in that direction.

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