Syrma SGS Profit Rises 67% to Rs 66 Cr in Q2

New Delhi, Nov 11 (PTI) Electronics manufacturing services company Syrma SGS has posted a 67 per cent increase in consolidated profit after tax (PAT) to Rs 66.3 crore in the September quarter on account of focus on the company's high margin businesses, a top company official said on Tuesday.

Syrma SGS had posted a PAT of about Rs 40 crore in the same period a year ago.

"We had re-strategised our business model around the second quarter last year where we said the dependence or focus on low margin consumer business, high volume consumer business would slowly and steadily be tapered down. We have done that," Syrma SGS Managing Director J S Gujral told PTI.

He said low margin high volume consumer business contributed around 30 per cent during the quarter under review.

"Our exports have gone up 36 per cent, automotive has gone up 22 per cent, industrial has gone up 30 per cent, healthcare has gone up 21 per cent. All high margin businesses have shown growth and that has sort of contributed to the performance of the company in terms of margins," Gujral said.

"So, if my exports grew at 36 per cent, it means I'm doing something where businesses, customers are sort of transferring their business, migrating their businesses from their existing supply chains to us," Gujral said.

He said 5 per cent of the company's export business comes from the US.

"The US is currently in a sort of a grey area because of the tariffs. Hopefully, I believe in the coming weeks or months, the quarter, the tariff position should be resolved. Once that thing comes in, I think next year onwards, our exports should do better than what we are doing today," Gujral said.

The consolidated revenue from operations grew about 38 per cent to Rs 1,145.88 crore during the second quarter of the current fiscal year from Rs 832.74 crore a year earlier.

The company has announced to acquire 60 per cent majority stake in Elcome for Rs 235 crore, through a mix of primary capital infusion and secondary share purchase. It plans to acquire remaining 40 per cent stake in multiple tranches over next three years, linked to performance and earn-out milestones.

"We have acquired Elcom because we were not present in the defence domain. Defence domain was almost negligible in our complete portfolio or basket of offerings. Hence, we were looking for a good company," he said.

Gujral said the acquisition of Elcome adds expertise of defence and maritime business to the company, specially in the area of navigation, communication, surveillance, and platform automation systems.

"Elcome's extensive engineering and field service experience, combined with our industrial scale and supply chain, creates an ideal base to pursue larger integrated defence programs. Our focus will be on strengthening governance, operational systems and execution capabilities, while accelerating the introduction of new indigenous technologies and solutions," Gujral said.