Air compressor and automotive equipment manufacturer Elgi Equipments Ltd (EEL) has seen its net profit dip slightly in the second quarter of the current fiscal compared to the corresponding quarter last year. The net profit has slipped despite a near 7 per cent increase in net income from operations.

Jairam Varadaraj, Managing Director, EEL, Coimbatore, said the challenging global economic scenario is likely to continue in the coming quarter.

According to the audited financial results for Q2 of the current fiscal, EEL on a standalone basis recorded net sales of Rs 204.32 crore compared to Rs 189.68 crore in the same quarter last year.

While the cost of materials consumed dropped to to Rs 93.96 crore (Rs 94.20 crore), there was a sharp spike in employee benefit expenses at Rs 23.15 crore (Rs 15.70 crore). Expenses towards employee benefits and a Rs 4-crore increase in other expenses pushed up total expenses to Rs 183.52 crore from Rs 167.28 crore in the corresponding quarter last year. Net profit for the second quarter of the year declined marginally to Rs 16.74 crore (Rs 17.36 crore). EPS for the quarter (share face value Re 1) was Re 1.06 (Rs 1.10).

Varadaraj said the performance of the compressor segment in the domestic market was mixed as the core segments were 'subdued'. He hoped that the acquisition of 100 per cent stake in Rotair S.p.A of Italy would give the company access to new technologies and product lines apart from helping EEL gain a 'strong foothold in markets where it is not currently present'. The company also launched a wheel aligner for trucks during the quarter which he expected to get a good response from the market.

He said the uncertainty in the economic scenario continued to be challenging across geographies and felt that this trend would persist in the coming quarter globally.

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