Crompton Greaves Limited (CGL), India`s largest private sector electrical equipment manufacturer continued its dismal run in FY01. The company however, has almost halved its net loss to Rs 732 m as compared to a loss of Rs 1,466 m posted in FY00.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Earnings per share*
Though the company's turnover declined by 18%, its expenditure declined at a slower 13%. This resulted in an operating loss of Rs 702 m for CGL. A huge jump in other income has contributed to the lower losses reported by the company. An extraordinary income of Rs 289 m also helped Crompton prune its losses. On the expenditure side, a decline in both interest and depreciation also aided the company.
If we take out the effect of the other income and the extraordinary income from both FY00 and FY01, then Crompton Greaves net operating loss has actually gone up from Rs 1.6 bn in FY00 to Rs 2 bn in FY01.
The company's turnover declined by 22% in the 4QFY01. But since its expenditure declined at a faster clip the company's operating margins improved by a significant 480 basis points. A 53% decline in interest costs and a 32% decline in depreciation provisioning helped the company post a net profit of Rs 134 m.
The company has not declared a dividend in view of its negative performance. It did the same last year too.
Though the company has shown signs of improvement by cutting costs and pruning losses, it is very early to say whether the company is headed for a turnaround. The economic activity is still sluggish and it may be some time before Crompton can find its feet.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407