High costs drag Escorts FY11 consol net profit down 4% YoY

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High costs drag Escorts FY11 consol net profit down 4% YoY

Tractor maker Escorts' consolidated net profit for 2010-11 [October-September] declined 4% year-on-year to Rs 126.39 crore, on the back of rising cost of raw materials and high interest charges among other things.

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Moneycontrol Bureau

Tractor maker Escorts ' consolidated net profit for 2010-11 [October-September] declined 4% year-on-year to Rs 126.39 crore, on the back of rising cost of raw materials and high interest charges among other things.

The company's consolidated net sales for the fiscal were up 22% from a year ago to Rs 4,050.33 crore.

"Escorts annual results reflect the direct impact of a sharp rise in material costs in an overall inflationary economy characterized by price increase of raw material, higher petroleum prices and high interest rates," said Rajan Nanda, chairman and managing director.

In 2010-11, Escorts' raw material costs were up nearly 23% from a year ago to Rs 2,709.88 crore. Interest, bank and finance charges for the full year doubled to over Rs 371 crore.

Nanda said the company's aggressive market strategies, launch of new products, recent price revisions and ongoing cost compression exercise should provide some cushion in the event of continued inflationary pressures.

In 2010-11, Escorts' consolidated agri machinery products revenue rose 19% to Rs 3,017.59 crore. Its construction equipment revenue was up 45% to Rs 827.35 crore and auto ancillary products revenue rose 11% to Rs 123.04 crore. However, revenue from railway equipments fell marginally to Rs 192.27 crore.

"There is much to look forward to as Escorts has entered into number of new areas in the tractors business, and is looking at significant expansion of products and geographical reach," said Nikhil Nanda, joint managing director.

Escorts shares closed up 0.2% at Rs 77.90 on NSE on Monday.

Nachiket Kelkar
nachiket.kelkar@network18online.com