Ucal Fuel Systems Ltd has reported a net profit of Rs 7.77 crore for the fourth quarter of 2010-11, three times as much as in the corresponding period of last year (Rs 2.57 crore).

For the full year, the net profit was Rs 22.20 crore against Rs 7.56 crore for 2009-10. The board has recommended a dividend of Rs 4 a share. On the NSE today, the Ucal shares closed at Rs 77.50, lower than the previous close by Rs 1.40.

But it is the consolidated figures that reveal the story behind the success.

In 2009-10, the company had reported a net loss of Rs 23.76 crore. For 2010-11, consolidated net profit grew to Rs 19.25 crore, a ‘swing' of Rs 43 crore. This happened because the US subsidiary, Amtec Precision Products, turned in a much better performance, making a cash profit for the first time since Ucal took over, for Rs 120 crore, in 2005.

“We have not been financially supporting Amtec since October 2009,” Mr Jayakar Krishnamurthy, Chairman and Managing Director and Chief Financial Officer of Ucal Fuel Systems, told Business Line today.

In the current financial year, Amtec will make a positive net profit, he said.

In 2011-12, Ucal Fuel intends to invest Rs 75 crore in expansion, half of which will go into the acquisition of pressure die-casting machinery for its Bawal and Maraimalainagar plants, Mr Krishnamurthy said.

Interest cost (Rs 32 crore against Rs 35 crore previously) continues to be a burden on the company's finances, but Mr Krishnamurthy said that the company has been investing in capex without any addition to the debt stock of Rs 350 crore. Last year, Ucal added Rs 36 crore to its gross block, but the (consolidated) interest costs have actually come down, albeit marginally.

Mr Krishnamurthy said that in the current year there would be a Rs 25 crore net reduction in debt. About Rs 50 crore of debt is up for repayment, but there will be an additional borrowing of Rs 25 crore. The company is looking at external commercial borrowings as a means of achieving reduction in interest costs.

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