KOEL warns of uncertain future despite better results

Our Bureau

Pune, June 6: EVEN as Kirloskar Oil Engines Limited announced improved results for 2000-2001, it has issued warnings of an uncertain year ahead. “The sales in the first two months are lower in the current year as compared to the corresponding period last year. Unless the monsoons are good as predicted, and the depressed economic condition improves, company’s outlook for the year is uncertain,” the company sates.

During the financial year ending March 31, 2001, the company was able to overcome depressed market conditions and post better results. Mr DR Swar, director, KOEL, said, “the engine as well as the auto component markets in the country were depressed during the year and there was continuous pressure on the retention of the market shares and selling prices”.

KOEL focussed on improving the working capital management, cost control and improving service levels to the customers. Inventories were reduced and better control was exercised over the debtors. This enabled the company to reduce the working capital.

The release of funds from the working capital and income of Rs 10.3 crore from sale of investments enabled the company to reduce the debt by Rs 50 crore. The company also replaced high cost debt with lower interest bearing debt taking advantage of the reduced interest rates and improved credit worthiness of the company.

Consequently, the interest burden was reduced to Rs 23.4 crore from Rs 37.9 crore in the previous year. The cost control at the company has resulted in the improvement of the raw material cost despite pressure on the selling prices.

The operating sales income has remained unchanged from the previous year, but total sales income of the company has gone up to Rs 790 crore due to trading in coke, oil and others amounting to Rs 56.8 crore up from Rs 30.9 crore in the previous year.

Operating profit has gone up to Rs 31.3 crore compared to Rs 24 crore in the previous year. Extraordinary items have added Rs 10.3 crore to the kitty. These include profit on sale of investments. Profit after tax is Rs 41. crore which is lower than previous year’s 81.9 crore.