A provision for anticipated losses on certain projects amounting to Rs 109 crore has drastically pulled down the net profit of Siemens Ltd for the quarter ended March 31, 2008, compared to the year-ago period.
Siemens reported a net profit of just Rs 1.6 crore against Rs 108 crore in the year-ago period.
Dr Armin Bruck, the company’s Managing Director, said, in the quarter, the company’s profitability took a “one-time hit” mainly due to the provision that it made for anticipated losses on certain projects.
“However, we have already charted out corrective measures for better risk management in future. Going forward, we are confident that we will be able to deliver results within the planned corridor for the year-end,” he said.
The company said in accordance with the established practice in relation to construction contracts, contract revenue is calculated based on the ratio of costs incurred to total estimated costs to complete the project. “Consequent to the revision of the costs to complete certain projects, in the quarter ended March 31, 2008, there is a reversal of turnover amounting to Rs 116.60 crore. And, in addition a provision for estimated losses aggregating Rs 109.80 crore is included in Other Expenditure,” it said.
Further, in the last fiscal corresponding to the reported quarters, Siemens had three businesses that were subsequently transferred to separate Siemens companies or sold. As a result, the revenues from these operations are no longer reflected in the books of Siemens Ltd in the current year.Sales revenues ‘satisfactory’
Dr Bruck said: “While our sales revenues have grown satisfactorily in line with the market growth, the figures are not strictly comparable as we have moved two businesses into separate companies and have sold out automotive business as part of a global deal.”
During the quarter, the company’s income was Rs 2,156 crore against Rs 2,140 crore in the corresponding quarter of last fiscal. Total expenditure was Rs 2,154 crore against Rs 1,978 crore in the year-ago period.
Its new orders stood at Rs 2,342 crore, an increase of 20 per cent over the corresponding quarter of the previous year. Outlook
The major growth drivers were the automation and drives, industrial solutions and services businesses.
On the industry outlook, Dr Bruck said the Indian economy was currently going through a correction phase and the business sentiment was “cautiously optimistic”. The overall industry is experiencing cost pressure due to the rising inflation and the consequent rise in commodity prices. “The appreciating euro and slowdown in the global markets has created temporary setback as we see new investments in projects are getting marginally delayed. We are confident that this is a transitory phenomenon and the markets will bounce back in the weeks ahead,” he said.
Siemens reported a net profit of just Rs 1.6 crore against Rs 108 crore in the year-ago period.
Dr Armin Bruck, the company’s Managing Director, said, in the quarter, the company’s profitability took a “one-time hit” mainly due to the provision that it made for anticipated losses on certain projects.
“However, we have already charted out corrective measures for better risk management in future. Going forward, we are confident that we will be able to deliver results within the planned corridor for the year-end,” he said.
The company said in accordance with the established practice in relation to construction contracts, contract revenue is calculated based on the ratio of costs incurred to total estimated costs to complete the project. “Consequent to the revision of the costs to complete certain projects, in the quarter ended March 31, 2008, there is a reversal of turnover amounting to Rs 116.60 crore. And, in addition a provision for estimated losses aggregating Rs 109.80 crore is included in Other Expenditure,” it said.
Further, in the last fiscal corresponding to the reported quarters, Siemens had three businesses that were subsequently transferred to separate Siemens companies or sold. As a result, the revenues from these operations are no longer reflected in the books of Siemens Ltd in the current year.Sales revenues ‘satisfactory’
Dr Bruck said: “While our sales revenues have grown satisfactorily in line with the market growth, the figures are not strictly comparable as we have moved two businesses into separate companies and have sold out automotive business as part of a global deal.”
During the quarter, the company’s income was Rs 2,156 crore against Rs 2,140 crore in the corresponding quarter of last fiscal. Total expenditure was Rs 2,154 crore against Rs 1,978 crore in the year-ago period.
Its new orders stood at Rs 2,342 crore, an increase of 20 per cent over the corresponding quarter of the previous year. Outlook
The major growth drivers were the automation and drives, industrial solutions and services businesses.
On the industry outlook, Dr Bruck said the Indian economy was currently going through a correction phase and the business sentiment was “cautiously optimistic”. The overall industry is experiencing cost pressure due to the rising inflation and the consequent rise in commodity prices. “The appreciating euro and slowdown in the global markets has created temporary setback as we see new investments in projects are getting marginally delayed. We are confident that this is a transitory phenomenon and the markets will bounce back in the weeks ahead,” he said.
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