Raymond's operating profits nose-dives - Views on News from Equitymaster

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Raymond's operating profits nose-dives

Aug 1, 2000

Raymond Limited has posted a marginal 1.2% rise in sales from Rs 2,286 m in 1QFY00 to Rs 2,416 m in 1QFY01. However, the both the margins and profit at the operating level have nose-dived thus cramping the bottomline. This is due to the increase in the manufacturing costs and a sharp rise in the excise duty from Rs 49 m in 1QFY00 to Rs 197 m in 1QFY01. However since the last year's figures are not comparable as the company has divested its cement division to Lafarge India for a consideration of Rs7,850 m.

(Rs m)1QFY001QFY01Change
Sales 2,386 2,416 1.2%
Other Income 20.4 26.5 29.9%
Expenditure 2,085 2,304 10.5%
Operating Profit (EBDIT) 301 112 -62.8%
Operating Profit Margin (%)12.6%4.6%
Interest 290 253 -12.7%
Depreciation 246 242 -1.4%
Profit before Tax-214-35766.8%
Other Adjustments - -
Tax - -
Profit after Tax/(Loss) (214) (357)
Net profit margin (%)-9.0%-14.8%
No. of Shares (eoy) (m) 75.1 75.1
Diluted number of shares 75.1 75.1
Diluted Earnings per share*-11.4-19.0
*(annualised)

The notable fall in interest outflow is understandable as the company would have used its sales proceeds to payout the high cost debt. Interest for the full year is also expected to be lower and the company is expected is post better operating margins as the benefit of divestment should improve its operating margins (the per unit consumption cost of power for the cement plant is the highest at Rs 4.83). This along with expected pick up sales of the textile division in the later half of the financial year should help the company in posting better results.

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