The June quarter result of Crompton Greaves was below expectations on account of losses that it had booked under its subsidiaries, and there was also margin pressure in its stand-alone business.

The subsidiaries apparently were reeling under losses due to rise in raw material cost. Also the company has been in a consolidation mode since its acquisitions, therefore, the numbers tough to compare.

It reported that stand-alone revenues went up by 9.4% year on year (yoy), meanwhile the expectation was of 12.6% yoy. The consumer product divisions saw revenues growth of 16.2% yoy. Meanwhile, the power systems divisions saw revenue growth in line with expectation at 12% yoy. The biggest disappointment was the industrial system division at its revenue growth was a meek 2.2% yoy.

The operating profit margin too was lower by 2.9 percentage points at at 12.7%; because of the cost input pressure seen across divisions. This was mainly led by the rise in the raw material and employee costs. Overall, profit after tax went down by 9.2% yoy.

Net revenue of the consolidated entity rose by merely 5.8% yoy (below projection of a 16.5% growth) mainly on account of a 1% yoy rise in the revenue from the subsidiaries.

The company"s margins came under pressure as its subsidiaries reported an operating loss of Rs 4.80 crore. Then there was additional pressure as because of 14.8% yoy rise in the raw material cost on subdued sales. The subsidiaries reported a net loss of Rs 51.3 crore in total.

The below-forecast profits and the gloomy business outlook have pushed the company's share prices of the cliff, it fell over 29% since Tuesday. Shares in Crompton, which is at present valued by the market at $2.99 billion, has lost close to 44% since beginning of the calendar year.

OneIndia Money