Finolex Cables posts 76.65% jump in net profit at Rs 127 cr

Electrical and communication cables manufacturer Finolex Cables on Wednesday reported a 76.65 per cent increase in consolidated net profit for the quarter ended September 30 at Rs 126.84 crore due to lower tax expenses and decline in expenses. The company had reported a net profit of Rs 71.8 crore in the corresponding quarter last fiscal.

Its income from operations for the July-September period increased to Rs 715.76 crore from Rs 713.97 crore in Q2 FY2019, the company said in a statement. "The company has opted for following the recently announced lower tax rates and as a consequence profit for the quarter, after taxes, improved during the quarter," it said.

The total expenses reduced to Rs 628.79 crore from Rs 639.48 crore in Q2 FY2019. It further said that the growth in net sales were affected by the slowdown in automobile, industrial and communication sectors, with optic fibre cables (OFC) being affected the most.

"Further, commodity prices continued to fall in the quarter leading to lower realisations," it said. On volumes, electrical wires grew by a healthy 12 per cent, while the agricultural applications grew by more than 25 per cent.

"In the communication sector, OFC volumes declined due to slowdown in government spending as evidenced by the financial difficulties currently being faced by BSNL and MTNL. It is expected that the recent announcement to revive BSNL and MTNL will have a positive impact in the coming quarters," it said.

The company further said that non-governmental spending in fibre assets by telecom companies has also seen a substantial dip in the recent months, with the major telcos have to financially restructure themselves. "The subdued level of activity is expected to continue for a few quarters more. Also, new business growth was subdued, contributing Rs 16 crore as against Rs 18 crore in the previous year," it said.

The company further stated that volume showed improvement, however, higher spends on advertisement and market development activities resulted in lower profitability. "As volumes improve further, it is expected that profitability should improve as well," it added..