The Hindu Business Line : Alfa Laval: Meeting market expectations

The strong order backlog in the beginning of the year translated into a 30 per cent growth in revenues to Rs 376.46 crore for the year. Despite a sharp drop in operating margins in the last quarter, the margins for the 12-month period were stable.

During the year, order booking was buoyant in both the domestic and overseas market. On the domestic front, vegetable oil and the breweries segment witnessed increased activity. The export market too picked up as the company bagged a number of orders from overseas markets such as Vietnam and Thailand.

The operating margins, however, took a hit in the last quarter due to the steep rise in input costs, especially steel prices. Cost of raw materials as a percentage of total costs surged to 81 per cent from 73 per cent a year ago. The pressure of increasing inputs costs was evident in the September quarter too. Though the company has been successful in passing on the initial steel price increases, it appears to have absorbed the costs later. However, cost cutting on other parameters such as employee costs and manufacturing costs contained the squeeze on margins to a large extent for the 12-month period. The operating margins for the quarter ended December 2003, dipped by six percentage points to 21.5 per cent. The dip in margins could also be due to the higher growth in the process technology division as compared to the equipment business. The margins are lower in the process technology business. However, the margins for the 12-month period remained stable at 25 basis points.

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