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Informist, Thursday, Nov. 14, 2024

By Aman Aryan

MUMBAI – Bharat Dynamics Ltd. posted a weak performance for the September quarter owing to supply chain disruptions due to the ongoing Russia-Ukraine war and conflicts in West Asia. The company's net profit for the quarter was INR 1.23 billion, down 16.7% from INR 1.47 billion in the year-ago quarter. The company's net profit has fallen for two consecutive quarters after registering growth in the previous four consecutive quarters. 

However, the ammunition and missile systems manufacturing company's net profit in Jul-Sept recovered from the 83% on-year fall it had reported in the June quarter. While the company's revenue and net profit fell on year, both posted a significant sequential jump due to a low base in the previous quarter. The company's net profit rose 17 times sequentially, the highest ever sequential jump in at least 20 quarters due to a low base.

Revenues of the company fell to INR 5.45 billion for the September quarter, 11.5% lower than INR 6.16 billion a year ago. Sequentially, the company's revenues rose 185%, the highest on-quarter jump in 12 quarters.  

A 7% on-year fall in the total expenses for the September quarter cushioned the impact of the decline in revenue. Bharat Dynamics' total expenses for the quarter were INR 4.64 billion. Besides subdued sales, the company's increased cost of materials consumed, and employee benefit expenses also weighed on its net profit for the quarter. The company's cost of materials consumed rose 17% on year to INR 2.10 billion during the quarter and its employee benefit expenses rose 10% to INR 1.42 billion. 

The company's depreciation and amortisation expenses for the latest quarter rose 1.4% to INR 177 million. The depreciation and amortisation expenses for the company have risen only twice in nine quarters, in the March quarter of 2023-24 (Apr-Mar) and in the latest quarter. The company's other expenses fell slightly to INR 803 million. These expenses have fallen for the past three quarters, but the fall in the latest quarter is the smallest one in last four quarters. 

The company's inventory related expenses were INR 137 million for the quarter, down very sharply from INR 919 million in the year-ago quarter. Bharat Dynamics' inventories were INR 22.57 billion as of Sept. 30, up from INR 19.82 billion on Mar. 31. The company said the inventory includes INR 833.89 million of non-moving inventories which have not moved for more than five years. The company said these were procured on the basis of orders that were subsequently short-closed by the customers. No provision is necessary for these as the orders were backed by advances of INR 3.62 billion, which is in excess of the value of the inventory. The company, however, did not specify whether it retained the full advance or what was the settlement for the short closing of these orders.    

Bharat Dynamics said it expects most of the issues related to supply chain disruptions to be resolved by the second half of the current financial year. For Apr-Sept, the company's net profit fell to INR 1.30 billion from INR 1.89 billion in the year-ago period. For the half year, revenues fell to INR 7.36 billion from INR 9.14 billion a year ago.

The company's shares ended at INR 989.55 on the National Stock Exchange, up 1.1%, on Thursday.  End

Edited by Tanima Banerjee

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