Buoyed by higher production volumes for motorcycles, the country's largest forging company posted a whopping 26 per cent increase in net sales to Rs 139.78 crore, up from Rs 110.8 crore in the first quarter last year. Total income of the company increased from Rs 110.8 crore recorded in the previous fiscal to Rs 140.23 crore during the period.

Total expenditure was higher at Rs 106.51 crore, up from Rs 84.38 crore during April-June last year. Interest charges, however, fell from Rs 12.13 crore to Rs 9.62 crore during the period, while provision for depreciation was marginally higher at Rs 8.03 crore. The company had provided Rs 7.08 crore for depreciation during the first quarter of last fiscal. The company has not provided for tax during the first quarter.

Bharat Forge is in thebusiness of making forging steel and crankshafts for automobile and heavy engineering industries and is a leading supplier to auto ancillaries.

Insight

Volumes prop profit

Increase in offtake by auto ancillary units has resulted in a 26 per cent surge in sales for Bharat Forge. Bulk of the demand comes from the OEM segment of automobile manufacturers and in sectors like railways, defence; all of which has enhanced production in this quarter. Interestingly higher volume sales have not been at the expense of lower sales realisation. The operating margins were steady at 24 per cent, despite a small rise in prices of raw material steel. This has culminated in net profit growth of 122 per cent in the last quarter compared to the similar period last year. The stock market has already started giving higher discounting to the stock with the value of stock increasing by 50 per cent to Rs 120 in the last quarter.

--Manish Saxena