Balrampur Chini Mills (BALRAMCHIN) Q4 06/07 earnings summary

Executive summary

• FY 2006-07 was the first loss-making year, as record sugar output and weak prices coincided with high Uttar Pradesh cane costs; integrated distillery and power operations cushioned the downturn.

• Crushing capacity reached 73,000 TCD; new Mankapur and Kumbhi complexes began operations, while Gularia was set to start in the 2007-08 season.

Financial highlights

• Gross turnover was Rs 1,476.32 crore for the 12 months ended September 30, 2007, versus Rs 1,989.77 crore for the prior 18-month period; periods are not comparable.

• Net loss was Rs 41.84 crore versus profit of Rs 291.59 crore in the prior 18-month period; PBDIT was Rs 99.27 crore and PBT loss Rs 35.37 crore.

• No dividend was recommended due to the loss; reported EPS was negative Rs 1.69.

Outlook and guidance

• Domestic sugar output was forecast at 286 lakh tonnes in 2007-08, with exports of 4–5 million tonnes and consumption estimated to rise to 22.5 million tonnes.

• Sugar prices were expected to remain near current levels in 2007-08, with potential upward movement in 2008-09 as production was expected to fall.

• Mandatory ethanol blending was scheduled to increase to 10% from October 2008; higher blending was expected to lift long-term ethanol demand.