Mico Bosch FY 2005 net falls 8 per cent despite 27 per cent rise in sales

Auto ancillary company Mico Limited, a subsidiary of German auto technology giant Robert Bosch, has reported a decline in net profits for the financial year 2005 on higher depreciation and interest costs.

The company posted a net profit of Rs343.07 crore, or Rs107 per share, for the financial year ended December 2005 as compared to Rs374.76 crore, or Rs117 per share, for 2004, a decrease of 8.46 per cent. Total revenues for the year increased to Rs3,102.91 crore as against Rs2,434.4 crore, a growth of 27.46 per cent.

The main reasons for the fall in profits were substantial increases in interest and depreciation charges for the year. Interest costs increased by 51.57 per cent to Rs49.32 crore as compared to Rs32.54 crore for 2004. Depreciation charges doubled to Rs198.09 crore from Rs98.88 crore.

The company said the rise in depreciation was on account of the substantial investment of Rs388 crore in fixed assets made during the year for rolling out new products and capacity expansion of existing products.

Operating profits as a percentage of net sales declined substantially to 21.68 per cent for the year 2005 as compared to 29.16 per cent for the previous year. The decline in operating margins was on account of higher raw material costs and other expenses.

Raw material consumption as a percentage of net sales increased to 49.66 per cent during 2005 as compared to 48.52 per cent during the previous year. Staff costs increased by 10.47 per cent and other expenses by 21.21 per cent for 2005 as compared to 2004.

For the quarter ended December 2005, the company has reported a net profit of Rs63.13 crore, or Rs19.7 per share, as against Rs60.84 crore, or Rs19 per share, for the previous year quarter. Total revenues for the quarter increased to Rs871.27 crore from Rs639.63 crore during the pervious year quarter.

Mico had reported a net profit of Rs85.89 crore, or Rs26.8 per share, during the quarter ended September 2005 on total revenues of Rs799.79 crore.

Mico has plans to invest up to Rs1,800 crore by the year 2008 to expand capacities and introduce new products in the domestic Indian market. The company would invest Rs550 crore to set up a facility to manufacture high-pressure common-rail diesel systems. Common-rail systems represent the most advanced and efficient diesel engine technology.

Robert Bosch GmbH has a 60.5-per cent stake in Mico. Domestic institutions held a stake of 21 per cent in the company as on 31 December 2005 while FII's held 7 per cent.

Mico closed at Rs3,266.25 (up 2.64 per cent) on the BSE yesterday.