Kirloskar Pneumatic Capital Market / 13:47 , Apr 28, 2011

Compression System Business drives growth

Kirloskar Pneumatic reported 17% jump in net sales to Rs 187.26 crore on the back of 20% rise in sales from compression systems business to Rs 168 crore for the quarter ended March 2011. Interestingly, operating profit margins expanded by the 270 basis points to 19.6% resulting operating profit to increase by 36% to Rs 36.67 crore. However, other income halved to Rs 3.65 crore. Quarterly Performance: Net sales increased by Rs 17% to Rs 187.26 crore for the quarter-ended March 2011. Its core business compression systems (90% of net sales) reported healthy growth of 20% in sales to Rs 168 crore. However, Transmission products business sales declined by 6% to Rs 19.26 crore. Interestingly, operating profit margins are expanded by 270 basis points to 19.6% on the back of decrease in other expenditure by 230 basis

points as percentage to sales and net of stock adjustments. In addition, employee cost decreased by 100 basis points. However, consumption cost increased by 150 basis points. Thus, Operating profit increased by 36% to Rs 36.67 crore. At PBIT level, margins from compression systems business improved by the 200 basis points to 26.3% resulting segment profit to increase by 30% to Rs 44.11 crore. However, Transmission products business reported loss of Rs 4.57 crore compared to Rs 1.74 crore in corresponding previous period. During the quarter, interest cost decreased by 25% to Rs 0.18 crore. Increase in depreciation cost by 126% to Rs 4.83 crore restricted the PBT to increase by 12% to Rs 35.31 crore. With whopping increase in tax rate by 590 basis points to 32.8% further restricted the PAT to increase by 3% to Rs 23.73 crore. After accounting 0.25 crore as prior period adjustments net profit remained flat at Rs 23.48 crore. Yearly Performance: Kirloskar Pneumatic registered 8% growth in net sales to Rs 491.73 crore for the year ended March 2011. However, operating profit margins decreased by 60 basis

points to 14% on the back of rise in consumption cost (whopping 500 basis points as percentage to sales and net of stock adjustments) resulting operating profit to increase by 4% to Rs 68.68 crore. Other income decreased by 18% to Rs 9.61 crore. With increase in interest by 1% to Rs 1.87 crore and depreciation by 54% to Rs 11.33 crore, PBT was down by 5% to Rs 65.09 crore. After accounting tax Rs 21.59 crore and prior period adjustments Rs 0.41 crore, net profit further down by 8% to Rs 43.91 crore. Other information: The Board of Directors recommend dividend of 120% i.e. Rs. 12/- per share on face value of Rs. 10/per share.

Financial results: Kirloskar Pneumatic Kirloskar Pneumatic Company 1103( 1003( Var 1103( 1003( Var 03) 03) (%) 03) 03) (%) Net Sales/ Income form operations OPM (%) Operating Profit Other Income PBDIT 187.2 160.2 17 6 7 19.6 16.9 36.67 27.06 36 3.65 6.96 -48 40.32 34.02 19 491.7 453.2 8 3 8 14.0 14.5 68.68 65.79 4 9.61 11.65 -18 78.29 77.44 1

Interest PBDT Depreciation PBT Tax PAT Prior period Adjustments Debit/(Credit) Net Profit EPS # EPS can not be annualised as seasonality of business Annualised Equity is Rs 12.84 crore, Face Value Rs 10 LP Loss to Profit PL: Profit to Loss Figures in Rs crore Source: Capitaline Corporate Database Segment Results: Kirloskar Pneumatic

0.18 0.24 -25 40.14 33.78 19

1.87 1.86 1 76.42 75.58 1

4.83 2.14 126 11.33 7.35 54 35.31 31.64 12 11.58 8.52 36 23.73 23.12 3 -0.25 0.33 PL 23.48 23.45 0 # # 65.09 68.23 -5 21.59 20.66 5 43.5 47.57 -9 0.41 0.33 24 43.91 47.9 -8 34.2 37.3

Va Va 110 100 % 110 100 r r % of 3(0 3(0 Of 3(1 3(1 (% (% Sales 3) 3) Sales 2) 2) ) ) Segment Revenue Compression Systems Transmission Products Total Less: Inter Segment Revenue 168 139. 20 90 84 435. 390. 11 86 26 37 56.4 62.9 -10 14 7 1 100

19.2 20.4 -6 10 6 3

187. 160. 491. 453. 17 100 8 26 27 73 28 0 0 0 0

Net Sales/Income from operations PBIT Compression Systems Transmission Products Total Less: Interest Other unallocable expenditure net off unallocable income Total Profit before tax Capital Employed Compression Systems Transmission Products Total Capital employed in segments

187. 160. 17 26 27

491. 453. 8 73 28

44.1 33.9 95.2 84.3 30 112 13 100 1 1 6 2 163 -12 0.3 PL 0 4.57 1.74 8.53 39.5 32.1 86.7 84.6 23 100 2 4 7 3 2 0.18 0.24 -25 4.05 0.29 129 7 1.87 1.86 1 19.7 14.5 36 7 3 65.0 68.2 -5 9 3 100

35.3 31.6 12 1 4

74.5 82.9 -10 4 8 58.9 70.3 -16 7 6 133. 153. -13 51 34

74.5 82.9 -10 4 8 58.9 70.3 -16 7 6 133. 153. -13 51 34 73.3 39.5 85 8

Add: Unallocable corporate 39.5 73.3 85 assets Net of liabilities 8 Total Capital employed 206. 192. 7 81 92

206. 192. 7 81 92