Difficult industry conditions and lower sales led to disappointing results of the Pune-based foundry company
Foseco India reported 11% lower year-on-year (y-o-y) net sales for the current quarter ended March 2013, at Rs55.86 crore, when compared to the Rs63.04 crore for the same period last year. Its operating profit dipped 15% y-o-y while net profit for the quarter ended 31 March 2013 declined 16% y-o-y to Rs5.81 crore.
During the last two quarters, the company witnessed negative sales growth, declining 4% in the December 2012 quarter and 11% in the March 2013 quarter. The three quarter sales growth average is -4%. Its three quarter y-o-y operating profit growth is worse, at -27% but the company cushioned the downfall with operating profit for the quarter dipping 15%. Despite this, the company has maintained its net profit, which has in fact increased on a quarter-to-quarter basis. The company’s market capitalisation is valued at nearly 8 times its operating profit while the return on networth is an impressive 23%, for a mid-sized enterprise.
Pune-based Foseco India has a portfolio of over 400 complex products, including resins, coatings, feeding systems, ferrous and non-ferrous metal treatment products and additives. Integrated steel plants and foundries are among the company’s clients. The foundry industry has been going to a cyclical phase and some of the products depend on automotive sector which is going through a difficult time. The company exports its products mainly to the Middle East, Sri Lanka, Nepal, Kenya, Ghana, Bangladesh, Singapore and Taiwan.
The board of directors of the company has declared an interim dividend of Rs1.50 per equity share of Rs10.
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