Bharat Forge Q3 consolidated loss at Rs 37 cr

Bharat Forge, the country’s largest forging company, posted Rs 36.56 crore consolidated net loss during the third quarter of the current fiscal as compared to Rs 70.96 crore during the corresponding period last year.

Total income was recorded at Rs 974.23 crore for the quarter ended December 31, 2008 as against Rs 1,099.16 crore in the same period last year.

On standalone basis, the company posted 92.52 per cent decline in standalone net profit at Rs 4.35 crore in the third quarter of the current financial year as compared to Rs 58.18 crore in the same period last year. The company, in a filing to the BSE, attributed the profit decline to the huge forex losses because of market volatility. During the quarter under consideration, total turnover slumped to Rs 459.36 crore as compared to Rs 583.85 crore in the same quarter last year.

In order to recognize the impact of fluctuation in foreign currency rates arising out of instrument acquired to hedge highly probable transactions. In appropriate accounting periods, the company has from this year decided to apply the principles of recognition set out in the international accounting standards as suggested by the Technical Directorate of the Institute of Chartered Accountant of India, as reflected in the Accounting Standard- 30 - Financial Instruments - Recognition and Measurement.

As a result, the impact of unrealized loss (net) consequent to foreign currency fluctuation in respect of effective hedging instruments outstanding as on December 31, 2008, to hedge future exports, aggregating Rs 29.81 crore are carried as a hedging reserve to be ultimately settled when the underlying transaction arises, in the profit and loss account as against the practice of recognizing the same in the profit and loss account, on valuation at the end of each period. Hence previous period / year figures are not strictly comparable, the company said in a BSE filing.

It has not entered into any exotic derivative hedging instruments, the company clarified.

Other foreign currency financial assets, liabilities, receivables, etc. that do not qualify for hedge accounting have been revalued at the period end rate and resultant net loss of Rs 28.21 crore for the quarter and Rs 185.06 crore year to date has been debited to profit and loss account and treated as exceptional item in above results on account of the wide fluctuation in foreign exchange rates witnessed during the quarter.

Out of this loss of Rs 25.68 crore for the quarter and Rs 156.07 crore year to date is in respect of FCCB’s which if not converted are repayable from April 2010 to April 2013.

The balance loss of Rs 2.53 crore for the quarter and Rs 28.99 crore for the year to date is in respect of other loans.