Elgi Equipments Ltd, manufacturer of air compressors, posted a consolidated profit after tax (PAT) of ₹12.02 crore for the June quarter, as compared to a loss of ₹8.73 crore in the lockdown-hit quarter a year-ago. The standalone PAT for the quarter was ₹26.01 crore compared to a loss of ₹7.06 crore in the same period in 2020-21.

The spiralling raw material prices in FY21 continued during the first quarter of this fiscal and had a significant adverse impact on profitability. Multiple price increases by the company yielded results with significant time lags, which is typical of capital goods. The company has not fully recovered the cost increases from the market.

Consolidated sales for the quarter stood at ₹489 crore against ₹286 crore in the corresponding quarter in 2020-21. Standalone sales were at ₹301 crore compared to ₹119 crore.

Covid-19 impact

The second wave of Covid-19 and associated lockdowns impacted business primarily through supply chain dislocations. The demand for products globally continued to remain reasonably strong, though in India it was slightly muted compared to the rest of the world, according to a statement.

Despite very difficult times faced by the automobile industry, sales from the company’s automotive business grew 39 per cent compared to the corresponding period of 2020-21. Here also, the impact of raw material price increases was acutely felt.

Outlook positive

The company expects to perform well in the second quarter if the pandemic related impediments do not adversely impact its operations. The pressure on profitability will continue but the company hopes to make up some of this through increased volumes.

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