Weighed down by rising commodity costs, Escorts Ltd has posted a five per cent dip in consolidated net profits to Rs 125 crore for the fiscal ended September 20, 2011. The tractor and farm implement maker follows an October-September financial year.

The consolidated net sales for the year rose 22 per cent to Rs 4,050 crore, even as total expenditure rose 20 per cent on account of a 24 per cent increase in material costs.

Inflationary costs

“The primary reason for the lower profits is that we couldn't pass on the inflationary costs – pig iron and rubber prices both rose in the year. We haven't seen a softening of steel costs yet,” said Mr Nikhil Nanda, Joint Managing Director, Escorts, said.

The company is taking several measures to neutralise the impact of higher input costs. This includes changing the product mix towards mid and higher horsepower tractors (50 HP and above), and increasing presence in the Western and South markets. Tractor volumes in the year were up by 5.5 per cent at 63,420 units in the previous year.

The Chairman and Managing Director, Mr. Rajan Nanda, said, “Looking ahead, our aggressive market strategies, launch of new products, recent price revisions and an ongoing cost compression exercise should provide some cushion in the event of continued inflationary pressures.”

Escorts Ltd shares at the BSE were up 0.26 per cent at Rs 78.05 on Monday.

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