Goa Carbon Net Declines 28%

Despite a rise in its EBIDTA margins, the decline in bottomline and the non-functioning of some of its plants for a few days in the year are likely to reflect badly on the company’s stocks.

Goa Carbon, which manufactures calcined petroleum coke, has reported a poor set of numbers in the March 2013 quarter. The company has reported a topline of Rs 84 crore, which marks hardly any growth due to lower realisations. Its bottomline declined by 28% to Rs 5.6 crore. The company has also reported its yearly financial performance, in which it has reported a 14% decline in revenues on a year-on-year basis. Its net profit too declined by 27% in FY13.

The company, in the quarter, has seen its EBITDA margins going up by 456 basis points which is a good indication of profitability. The raw material costs in the quarter have gone up significantly, but the key difference is made by the change in inventories which have reduced by 23%. Even in the balance sheet, the company has reported 46% reduction in its inventories, indicating that the company has liquidated its inventories. During the quarter, Goa Carbon has also reported a decline in the depreciation and other expenses which have helped it post an EBITDA of Rs 6.35 crore against a loss of Rs 1 crore in the December 2012 quarter and that of Rs 2.52 crore in the March 2012 quarter.

While the company has reported an improved operating performance, its other income has declined from Rs 1.7 crore in Q4FY12 to Rs 1.2 crore in Q4FY13. On similar lines, exchange gains too have declined to Rs 2.2 crore against Rs 8.6 crore reported an year earlier.

The company has also reported decline in its debt from Rs 164 crore in FY12 to Rs 133 crore in FY13. The interest cost has also declined by 14% to Rs 1.34 crore. During the quarter, the tax rate remained at 19% against 27% a year earlier. 

During the quarter, the company produced 35917 million tonnes (MT) of calcined petroleum coke. It however sold 36508 MT which further indicates the liquidation of inventories. The company kept its Bilaspur plant shut for 33 days against 66 days a year earlier. Similarly, the Goa and Paradeep plants were shut for 69 and 16 days respectively against 73 and 38 days correspondingly a year before. The Goa plant in fact did not produce anything in January and March due to a lower demand from the overseas markets. This, however, is a normal practice of the company as it has also kept its plants closed in all the quarter in the year. 

The positive part of the result is the rise in its EBITDA margins. Though the tax and interest expenses remained lower compared to last year, a fall in the other income has put the profits under pressure. 

In the balance sheet, the company has shown an increased net worth for the year. Though there is no long-term debt, its short-term debt stands at Rs 133 crore. Cash and cash equivalent has increased to Rs 76 crore against Rs 41 crore a year before and it is a good sign. The net debt to equity ratio stands comfortably at 0.7x. Trade receivables and inventories have declined drastically in the year. The balance sheet has shrunk in size as fixed assets have reduced.

Considering this poor performance, the stock is likely to show a negative reaction on the bourses.