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84
Sixty-Seventh Annual Report 2011-2012
Cost of material consumed (including change in stock):
Cost of material consumed in terms of % of net revenue
increased by 80 basis points, mainly on account of cost increase
in input prices (partly relatable to change in environment
norms from BS II to BS III) and adverse product mix. Despite
increase in commodity prices during the year, the Company
was able to contain the material cost through vigorous cost
reduction programs.
Employee Cost
increased by 17.3% to
`
2,691.45 crores from
`
2,294.02 crores in FY 2010-11. The increase is mainly
attributable to normal yearly increases, promotions, wage
agreements (where applicable) and increase in head count. In
terms of % to net revenue, the employee cost has marginally
increased from 4.9% to 5.0%. The Company continues to focus
on measures to manage employee cost on a long term basis.
Manufacturing and Other Expenses
were
`
8,405.51 crores
(
`
6,738.35 crores for FY 2010-11) and were 15.5% of net
revenue in FY 2011-12 compared to 14.3% in FY 2010-11. The
increase is primarily due to inflation, volumes, freight cost and
publicity expenses to promote the new products / variants.
Profit before Exceptional Item, Depreciation, Interest and
Tax
was
`
4,985.88 crores in FY 2011-12, as compared to
`
5,229.34 crores in FY 2010-11. The decrease is mainly due to
lower other income and lower operating margin.
Depreciation and amortization (including product
development / engineering expenses written off )
increased by 22.6% to
`
1,840.99 crores from
`
1,502.00 crores
in FY 2010-11. The increase reflects, impact on account of
additions to fixed assets towards plant and facilities for
expansion and new products introduction. Further, there has
been an increase in amortization relating to capitalization of
product development cost for products launched in the year.
Finance costs
decreased to
`
1,218.62 crores from
`
1,383.70
crores in FY 2010-11. The Company has achieved a
reduction in the weighted average borrowing cost and
discounting charges.
Exceptional Items
a) During FY 2011-12, the Company provided
`
130 crores
for the loan given to a subsidiary, consequent to
impairment at the subsidiary triggered by continuous
underperformance, mainly attributed by challenging
market conditions in which the subsidiary operates.
b) There was an adverse exchange fluctuation of INR versus
all major currencies. After accounting for deferral and
amortization as permitted by the Accounting Standard
AS-11, a net exchange loss including on revaluation of
foreign currency borrowings, deposits and loans, was
`
455.24 crores for the year (last year ’s
`
147.12 crores
represents amortization).
Profit before Tax (PBT)
of
`
1,341.03 crores represented 2.5%
of net revenue in FY 2011-12 as compared to PBT of
`
2,196.52
crores representing 4.7% of net revenue in FY 2010-11. The
reduction of PBT was mainly attributable to lower operating
margin, reduction in other income, increase in depreciation
and amortization, and exceptional items as explained above.
Tax expenses
decreased to
`
98.80 crores from
`
384.70 crores
in FY 2010-11. The effective tax rate for FY 2011-12 is 7.4% of
PBT as compared to 17.5% for FY 2010-11. The reduction in
effective tax rate is due to impact of tax treatment of
exchange differences and higher proportion of tax benefits
as compared to PBT.
Profit After Tax (PAT)
of the Company decreased by 31.4% to
`
1,242.23 crores from
`
1,811.82 crores in FY 2010-11. Basic
Earnings Per Share (EPS) decreased to
`
3.90 as compared to
`
6.06 in the previous year for Ordinary Shares and
`
4.00 as
compared to
`
6.16 for ‘A’ Ordinary Shares in the previous year.
The lower EPS reflects the lower PAT over a higher equity
base in FY 2011-12 as compared to FY 2010-11.
StandaloneBalanceSheet
Shareholders’ fund
was
`
19.626.01 crores and
`
20,013.30
crores as at March 31, 2012 and 2011, respectively.
(
`
in crores)
FY 2011-12 FY 2010-11
Consumption of raw materials and
components
33,894.82 27,058.47
Purchase of product for sale
6,433.95 7,363.13
Change in Stock-in-trade, finished
goods and Work-in-progress
(623.84)
(354.22)
Total
39,704.93 34,067.38