Escorts gets slapped by CCI
Escorts is currently down 1.3% at Rs.120.10, with an intra day low at Rs.119.60, with around 81,000 shares changing hands. Market cap stands at Rs.1469 crore.
The stock is down in the red on news that the Competition Commission of India (CCI) has slapped a fine of Rs.55 crore on the company for forming a cartel with respect to a tender for supplying spares to an Indian Railway undertaking. Penalty imposed is equivalent to 2% of its average turnover. The case relates to a DLMW tender, wherein the three vendors quoted identical rates of Rs 17,147.54 for feed valves per piece.
The company had posted a good set of numbers for Q3FY14, driven mainly by its agri or tractor business. Railways division was in fact a drag and was in losses. The company, which follows October-September fiscal, has extended its financial year by six months.i.e. to March 31, 2014, to align with April-March fiscal calendar. Accordingly, financial year 2012-13 will close on March 31, 2014. The company, reported an increase in net profit of 62% (YoY) at Rs.46 crore in the fifth quarter of its extended financial year. And for the 15-month period ended 31st Dec’13, the company posted a 118% rise in net profit at Rs.213 crore. Improvement in the product mix, price hikes, and cutting down on the other costs helped improvement in margins.