Escorts Group

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Escorts Quarter Profit Up 49.04 Per Cent At Rs 9.30 Crore

Nine month profits up at Rs 13.05 crore
Quarter PBT up 76.70% at Rs 14.33 crore
Nine month PBT up 474.93 % at Rs 21.10 crore

Escorts Limited has registered a 5.3 per cent increase in sales and a 49 per cent increase in net profit in the third quarter of fiscal 2007-08, ending June 30, 2008. Despite tight market conditions, Escorts Limited improved its performance over the corresponding quarter. The Profit After Tax stood at Rs 9.30 crore as against a loss of Rs 6.24 crore in the corresponding quarter. The profit for nine months was up to Rs 13.05 crore from a negative Rs 2.56 crore in the corresponding period. The rise in profits was substantially aided by improvement in cost management and rationalization. Escorts Limited follows an October-September fiscal year.

The company recorded a 76 per cent rise in profit before tax with the quarter reporting a PBT of Rs 14.33 crore as opposed to a loss of Rs 8.11 crore in the corresponding quarter last year. Total sales went up by 5.3 per cent to Rs 542.80 crore from Rs 515. 49 crore in the corresponding quarter. However, nine month sales slipped by 6.26 per cent to Rs 1,506.29 crore from Rs 1,606. 96 crore in the corresponding nine months.

Speaking on the results, Chairman and Managing Director Mr Rajan Nanda said, "Escorts Limited has turned in a good performance under difficult market conditions. What is particularly heartening is that the agri machinery business has registered strong growth both in the topline as well as profitability in the quarter. Our market share has grown despite difficult market conditions. We plan to further strengthen our sales and marketing efforts and introduce new products. While the quarter results reflect a strengthening of our business, we must underline that going forward the prevailing market conditions pose tough challenges for the sector. Public Sector retail finance for tractors continues to be sluggish and of concern. Tractor sales are dependent upon loan sanctions by public sector banks and it is imperative for the government to send strong signals to the banking sector to significantly step up lending to the priority sector, otherwise farm productivity and tractor sales will get impacted. The additional challenge is from the general inflationary environment, with critical raw materials such as steel witnessing three price increases within six months. The overall impact on the economy of rising oil prices and concomitant inflation is bound to have a general impact sooner than later."

According to Joint Managing Director Mr Nikhil Nanda, "The company's focus on fundamentals have paid back with a significant rise in the EBITDA to sales margins which has resulted from consistent attention on cost reduction initiatives across the company, raw material rationalization and energy saving initiatives. The stock correction strategy which focuses on cash generation and optimized stock levels at the distributor and stockist points has contributed significantly to controlling costs. Finally, our continued effort at building people resources has put in place a team that is battling the tough market conditions with insight and nimble responses."