Comments
Shares of aluminium packaging producer Ess Dee Aluminium have been pummelled over the last year. The company produces aluminium packaging for pharmaceutical producers. During the nine months ended December 2011, the company's sales slipped by two per cent to Rs 493 crore as it found it hard to increase volumes. Net profits fared worse dipping by 47 per cent to Rs 56 crore.
The company's subsidiary, India Foils, which accounts for nearly half the overall production capacity, has similarly been struggling to increase utilisation rates.
Making matters worse, the company also imports nearly all its requirement of aluminium. These prices averaged eight per cent higher during the nine months ended December 2011, compared to the same period a year ago. A weakened rupee led to a larger import bill which added to the impact of aluminium prices.
This hurt the company's operating margins which slipped by five percentage points to 27 per cent for the nine months ending December 2011. The company's low utilisation rates also hurt its bottomline. Higher interest and depreciation expenses (which were up by 83 and 41 per cent respectively), sharply dented the company's net profitability. Other income slipped by 36 per cent to Rs 13.5 crore. The overhang on the stock may well continue until capacity utilisation improves.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.