How has been the historical performance of GE Vernova T&D?

Revenue and Operating Income Overview

In the fiscal year ending December 2010, GE Vernova T&D reported net sales of ₹4,020.04 crores, supplemented by other operating income of ₹16.94 crores. This brought the total operating income to ₹4,036.98 crores. The company’s revenue base was primarily driven by its core operations, reflecting a robust demand environment in the transmission and distribution sector. The absence of purchases of finished goods indicates a vertically integrated manufacturing process, which may contribute to cost efficiencies.

Cost Structure and Profitability Metrics

The raw material cost was a significant component, accounting for ₹2,900.31 crores, representing the bulk of the expenditure. Manufacturing expenses stood at ₹461.60 crores, while employee costs were ₹346.59 crores, highlighting the company’s investment in human capital. Notably, the company recorded a negative change in stocks amounting to ₹122.63 crores, which could indicate inventory adjustments or stock utilisation during the period.

Total expenditure excluding depreciation was ₹3,585.87 crores, resulting in an operating profit before depreciation, interest, and tax (PBDIT) of ₹451.11 crores. Including a marginal other income of ₹0.17 crores, the operating profit was ₹451.28 crores, yielding an operating profit margin of 11.17%, a respectable figure for the sector.

Profitability and Earnings

After accounting for interest expenses of ₹76.06 crores and depreciation of ₹93.60 crores, the company’s profit before tax stood at ₹281.62 crores. Tax provisions amounted to ₹94.88 crores, resulting in a consolidated net profit of ₹186.74 crores. This translated into a profit after tax margin of 4.63%, reflecting moderate profitability amid the capital-intensive nature of the business.

Equity capital was ₹47.82 crores with reserves of ₹954.09 crores, indicating a strong equity base. Earnings per share (EPS) were reported at ₹7.81, signalling reasonable returns to shareholders for the period under review. The company maintained a public shareholding of 27.82% and had no pledged promoter holdings, which may be viewed favourably by investors concerned about promoter leverage.

Cash Flow and Financial Health

Cash flow analysis reveals that GE Vernova T&D generated a profit before tax of ₹281.62 crores, with adjustments totalling ₹237.36 crores. However, changes in working capital resulted in a cash outflow of ₹351.94 crores, reflecting increased operational funding requirements. Despite this, cash flow after working capital changes remained positive at ₹167.04 crores.

Operating activities generated ₹107.54 crores in cash flow, while investing activities consumed ₹113.35 crores, indicative of ongoing capital expenditure or strategic investments. Financing activities accounted for a cash outflow of ₹7.12 crores. Overall, the company experienced a net cash outflow of ₹12.93 crores during the year, with closing cash and cash equivalents at ₹118.14 crores, down from an opening balance of ₹131.07 crores.

Summary of Historical Performance

Overall, GE Vernova T&D’s historical performance as of December 2010 demonstrates a company with a solid revenue base and controlled expenditure, resulting in a healthy operating margin. Profitability metrics such as net profit margin and EPS indicate sustainable earnings, while the cash flow position reflects prudent financial management despite some working capital pressures. The absence of exceptional or extraordinary items suggests stable operational conditions during the period.

While the company’s net cash outflow signals investment activity and working capital demands, the closing cash balance remains robust, providing a cushion for future operational needs. Investors may find the company’s financial discipline and consistent earnings generation reassuring, though monitoring working capital trends will be important for assessing liquidity going forward.

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