Neyveli Lignite Corporation
Prior period sales lift topline
Neyveli Lignite Corporation, the lignite mining to power generation major
reported 2% increase in Net profit at Rs 285.83 crore for the first quarter
ended Jun' 08 even as its sales advanced by 40% to Rs 1087.14 crore. The
strong performance at topline is on account of prior period sale of Rs
357.91 crore and excluding that the sales have actually declined by 6%.
In spite of the strong topline growth powered by prior period sales, just a
2% growth at bottomline is largely on account of higher EO expenses and
provision towards likely liability of pending wage revisions, which has
nearly offset the spike in the form of prior period sales.
The company's sales advanced by 40% to Rs 1087.14 crore with Power
generation segment revenue (net of adj for earlier periods) up by 39% to Rs
1051.42 crore and the balance coming from lignite mining.
Quarterly performance
Revenue (net of adjustment to previous period sales) for the quarter ended
Jun'08 reported 40% increase to Rs 1087.14 crore compared to Rs 777.58 crore
in the corresponding previous quarter. Power tariff for the export from
thermal power station I expansion and thermal power station II have been
finalized during the current quarter for the period from 1.04.04-31.3.09,
consequently, an amount of Rs 357.91 crore relating to the earlier year is
accounted as previous period sales in the current quarter.
Excluding the prior period sales, the Net sale for the quarter has been down
by 6% to Rs 729.23 crore. Power generation segment revenue (net of adj for
earlier periods) was higher by 39% to Rs 1051.42 crore. While, Segment
revenue of Lignite mining was higher by 28% to Rs 780.93 crore.
Higher sales (including prior period sales) was backed strong expansion in
operating margin with the margins expanding by 790 bps to 57.5% propelling
the operating profit up by 62% to Rs 625.38 crore. However the OPM without
considering prior period sales and excluding provisions towards likely
liability on pending wage revision (including additional provisions for
earlier years) has been down by 720 bps to 45.7% leading the operating
profit down by 19% to Rs 333.04 crore. Employee cost for the current quarter
was higher by Rs 65.57 crore compared to Rs 26.0 crore in corresponding
previous period.
At PBIT level the lignite mining business booked marginally 1% increase in
profits at Rs 70.86 crore Similarly the power generation business to clocked
a segment profit of Rs 224.04 crore compared to Rs 218.63 crore in the
corresponding previous quarter, up by 2% y-o-y basis.
Despite the other income increasing marginally by 1% to Rs 150.48 crore,
fall in interest cost and depreciation provision took the PBT up by 61% to
Rs 671.88 crore. The interest outgo declined by 24% to Rs 1.42 crore and the
depreciation provision declined by 11% to Rs 102.56 crore for the period.
After accounting for EO expense (net of prior period exp write back) of Rs
275.06 crore (against an income of Rs 0.04 crore) the PBT after EO declined
by 5% to Rs 396.82 crore. EO represents mine closure expenditure in respect
of Mine II and Mine IA amounting to Rs 230.73 crore and additional provision
for pay revision arrears of Rs 41.32 crore for the previous years. Further
with 18% fall in provision for tax at Rs 110.99 crore, the Net profit for
the quarter settled at Rs 285.83 crore, up by 2%.
FY '08 performance
Revenue for the fiscal was higher by 41% to Rs 2981.65 crore. The operating
profit jumped up by 71% as OPM expand to 43.7% compared to 36.2% in
corresponding previous period. Strong expansion in margin come on the back
of cut in all cost heads barring staff cost. The company provided Rs 170
crore towards anticipated liability on account of pending wage revision in
FY '08 and also made an adhoc payment of Rs 70 crore in this fiscal to
staffs aggregating to Rs 240 crore of non recurring expenses in staff cost.
Result of this the staff cost as proportion to sales net of stocks was
higher by 140 bps to 27.4%.
Other income was higher by 10%, the interest cost was lower by 80% to Rs
8.80 crore and depreciation was higher by 2% to Rs 454.49 crore. Thus the
PBT was higher by 72% to Rs 1494.88 crore. EO expense for the fiscal gross
of Prior period expenses was Rs 73.59 compared to a prior period expense
write back of Rs 4.89 crore. The taxation was higher by 4% to Rs 319.72
crore. After accounting for EO and taxation the net profit was higher by 94%
to Rs 1101.57 crore.
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