In a challenging quarter marked by regulatory hurdles and unexpected financial setbacks, Greaves Cotton, a prominent player in India’s automotive industry, found itself grappling with significant issues that impacted its bottom line.
The reported standalone quarterly numbers for Greaves Cotton revealed a mix of successes and challenges. Net sales, a key indicator of the company’s revenue, stood at Rs 458.58 crore in September 2023, marking a notable increase of 22.57% from the previous year’s figure of Rs 374.14 crore. Despite the growth in net sales, the company faced a sharp decline in profitability. Quarterly net profit plummeted to Rs 123.40 crore in September 2023, down by a staggering 445.05% from the previous year’s figure of Rs 22.64 crore.
One of the significant contributing factors to this drastic decline in profitability was a one-time charge related to a government incentive for electric scooter sales. Greaves Cotton’s electric vehicle unit received a notice from the Indian government, accusing it of non-compliance with the guidelines of an e-scooter incentive scheme. Consequently, the company was directed to return the subsidies claimed, leading to a substantial financial provision of 4.77 billion rupees. Additionally, the government unexpectedly reduced e-scooter cash incentives from 40% to a mere 15% of the price before taxes, further impacting Greaves Cotton’s financial position.
The challenges did not end there. Greaves Cotton also faced increased expenses, exacerbating the financial strain on the company. Despite these setbacks, the company managed to achieve a positive trajectory in some areas. EBITDA, a measure of operating performance, stood at Rs 71.97 crore in September 2023, indicating a commendable increase of 76.4% from the previous year’s figure of Rs 40.80 crore. Moreover, Greaves Cotton’s earnings per share (EPS) showed improvement, increasing to Rs 5.32 in September 2023 from Rs 0.98 in September 2022.
Greaves Cotton STANDALONE QUARTERLY RESULTS In Rupees (Crore)
| SEP’23 | JUN’23 | SEP’22 | |||
| Net Sales/Income from operations | 458.58 | 395.95 | 374.14 | ||
| Other Operating Income | — | — | — | ||
| Total Income From Operations | 458.58 | 395.95 | 374.14 | ||
| EXPENDITURE | |||||
| Consumption of Raw Materials | 281.42 | 249.17 | 247.21 | ||
| Purchase of Traded Goods | 34.65 | 27.16 | 26.45 | ||
| Increase/Decrease in Stocks | -0.62 | -6.57 | -5.88 | ||
| Power & Fuel | — | — | — | ||
| Employees Cost | 35.07 | 33.49 | 28.66 | ||
| Depreciation | 9.68 | 9.39 | 9.53 | ||
| Excise Duty | — | — | — | ||
| Admin. And Selling Expenses | — | — | — | ||
| R & D Expenses | — | — | — | ||
| Provisions And Contingencies | — | — | — | ||
| Exp. Capitalised | — | — | — | ||
| Other Expenses | 44.49 | 48.08 | 44.42 | ||
| P/L Before Other Inc. , Int., Excpt. Items & Tax | 53.89 | 35.23 | 23.75 | ||
| Other Income | 8.40 | 9.70 | 7.52 | ||
| P/L Before Int., Excpt. Items & Tax | 62.29 | 44.93 | 31.27 | ||
| Interest | 0.39 | 0.39 | 0.51 | ||
| P/L Before Exceptional Items & Tax | 61.90 | 44.54 | 30.76 | ||
| Exceptional Items | 91.82 | 0.93 | -0.21 | ||
| P/L Before Tax | 153.72 | 45.47 | 30.55 | ||
| Tax | 30.32 | 11.68 | 7.91 | ||
| P/L After Tax from Ordinary Activities | 123.40 | 33.79 | 22.64 | ||
| Prior Year Adjustments | — | — | — | ||
| Extra Ordinary Items | — | — | — | ||
| Net Profit/(Loss) For the Period | 123.40 | 33.79 | 22.64 | ||
| Equity Share Capital | 46.40 | 46.40 | 46.31 | ||
| Reserves Excluding Revaluation Reserves | — | — | — | ||
| Equity Dividend Rate (%) | — | — | — | ||
| EPS Before Extra Ordinary | |||||
| Basic EPS | 5.32 | 1.46 | 0.98 | ||
| Diluted EPS | 5.28 | 1.45 | 0.97 | ||
| EPS After Extra Ordinary | |||||
| Basic EPS | 5.32 | 1.46 | 0.98 | ||
| Diluted EPS | 5.28 | 1.45 | 0.97 | ||
| Public Share Holding | |||||
| No Of Shares (Crores) | — | — | — | ||
| Share Holding (%) | — | — | — | ||
| Promoters and Promoter Group Shareholding | |||||
| a) Pledged/Encumbered | |||||
| – Number of shares (Crores) | — | — | — | ||
| – Per. of shares (as a % of the total sh. of prom. and promoter group) | — | — | — | ||
| – Per. of shares (as a % of the total Share Cap. of the company) | — | — | — | ||
| b) Non-encumbered | |||||
| – Number of shares (Crores) | — | — | — | ||
| – Per. of shares (as a % of the total sh. of prom. and promoter group) | — | — | — | ||
| – Per. of shares (as a % of the total Share Cap. of the company) | — | — | — | ||
| Source : Dion Global Solutions Limited | |||||
(Credits moneycontrol.com)
Despite these attempts at resilience, Greaves Cotton’s financial woes were further compounded by a one-time charge related to the gain from the sale of land, which contributed to an overall one-time charge of 3.81 billion rupees.
As the company navigates these challenges, Greaves Cotton faces a critical period of adaptation and strategic decision-making to overcome the setbacks caused by regulatory changes and unforeseen financial burdens. The path forward will require innovative solutions, financial prudence, and a resilient spirit to weather the storm and emerge stronger in the face of adversity.