PUNE: Finolex Cables Ltd., (FCL) at the meeting of its Board of Directors held today approved results for the third quarter of the financial year 2019-20.
Net Sales for the quarter ended December 31st, 2019 were Rs 702.36 crores as against Rs 749.56 crores for the corresponding period of the previous year representing a 6.3% drop in overall revenue.
Growth in Net Sales was affected by the overall slowdown in the economy and in particular the power, industrial and communication sectors, with Optic Fibre Cables being affected the most (a contraction of more than 30%). Also, commodity prices tracked lower during the quarter leading to lower realizations.
On volumes, Electrical Wires grew by 5%, while automotive wires grew by 17% with the addition of new customers. In the communication sector, the difficulties being faced by the Telecom companies (both private and public) continued with near-zero investment in fiber/cables. While the overall requirement of investment in cables continues to be large, the current financial woes of the sector are expected to continue for a few more quarters.
New business growth was excellent, with all product lines (Fans/Lamps/Switches/Switchgear) improving volumes by more than 30% over the corresponding period of the previous year; however, higher spending on advertisement and market development activities resulted in lower profitability. As volumes improve further, it is expected that profitability should improve as well.
Profit for the quarter, before taxes, was Rs.108.9 crores, as compared to Rs.119.17 crores in the previous year, owing primarily to substantially lower margins in the Communication segment. Owing to the adoption of the lower tax rates announced in September 2019, Profit for the quarter (on a standalone basis), after taxes, improved to Rs.80.63 crores against Rs.75.94 crores in the previous year. Net Profit on a consolidated basis for 9MFY20 stood at Rs 326.51 crore as compared to Rs 282.31 crore in 9MFY20 up 15.65%.
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