This reflects the growing confidence in Company’s growing expansion and financial performance. 26% Net profit annual growth, sales rising by 40%, expansion plan for new facility of generators and motors, moving manufacturing to Turkey to counter US tariffs.
7 Likes
The management attributed the gross-margin hit to a one-off incident on a Turkey contract, but the disclosure is sketchy. I am surprised analysts did not probe this further. The company did not quantify the liquidated damages in rupee terms, and it did not spell out the precise root cause either, beyond saying that a shipment from India to Turkey got stuck for about 1.5 months. It did not clarify whether the delay arose from external disruption, logistics failure, or some other issue, nor did it mention whether any contractual remedies such as force majeure relief or a back-to-back claim against the logistics provider were pursued. It is also puzzling how, when Turkey is a very small part of TDPS’ business, a Turkey-linked transaction was large enough to cause a meaningful hit to gross margins.
Finally, as a prudent accounting policy, is it not possible for the company to make provisions in advance whenever clauses of liquidated damages are in-built into customer contracts? I came across this in the latest Inox India Annual Report
This is more conservative, but TDPS seems to make no such provisions.
(Disc.: Invested)
1 Like