Crompton 2QFY01: Skycell to the rescue - Views on News from Equitymaster

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Crompton 2QFY01: Skycell to the rescue

Oct 24, 2000

Crompton Greaves Limited (CGL), India`s largest private sector electrical equipment manufacturer continues to battle falling turnover. As per the company's latest quarterly results (September 30, 2000) CGL's turnover has declined 13% to Rs 3.1 bn. However, aided by a huge extraordinary income (for sale of Skycell Communications) of Rs 985 m, the company managed to put in a positive bottomline.

(Rs m) 2QFY00 2QFY01 Change 1HFY00 1HFY01 Change
Sales 3,587 3,127 -12.8% 6,432 5,369 -16.5%
Other Income 16 985 - 20 1,009 -
Expenditure 3,593 3,610 0.5% 6,495 6,177 -4.9%
Operating Profit (EBDIT) (6) (483) - (63) (808) -
Operating Profit Margin (%) -0.2% -15.4%   -1.0% -15.0%  
Interest 250 215 -13.9% 481 459 -4.7%
Depreciation 134 107 -20.4% 263 238 -9.7%
Profit before Tax (374) 180 - (788) (495)  
Tax 0 0 - 0 3  
Profit after Tax/(Loss) (374) 180   (788) (497)  
Net profit margin (%) -10.4% 5.8%   -12.2% -9.3%  
Earnings per share* - -   (30.2) (19.0)  
(annualised)            

If you look at the company's first half performance, the picture is even more grim. In 1HFY01, Crompton's turnover declined 17% over the coressponding half year in FY00. What's more, the company is still in the red going by the first half performance. Although, the losses of the company have gone down as compared to the previous year. One must remember that Crompton had posted a net loss of Rs 1.5 bn during FY00.

As a result of the decline in turnover, the company's operational performance has taken a hit, resulting in negative operating margins.

It is no surprise then, that the company's stock trades at Rs 22 currently, which is near its 52 week low.

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