Godawari Power & Ispat (GPIL) Q4 04/05 earnings summary

Executive summary

• FY05 sales rose 56% to Rs 19,134.58 lakh and net profit increased 210% to Rs 2,410.68 lakh, driven by higher steel output, power generation and improved price realization.

• Expansion plans target greater integration across sponge iron, billets, power, ferro alloys and wire products; management expected stronger turnover and profitability in FY06.

Financial highlights

• Sales were Rs 19,134.58 lakh versus Rs 12,272.74 lakh in FY04; total operating income was Rs 19,187.07 lakh.

• Profit before tax was Rs 2,619.31 lakh versus Rs 843.36 lakh; net profit was Rs 2,410.68 lakh versus Rs 776.64 lakh.

• Operating profit margin improved to 20.29% from 16.84%; finance charges were Rs 287.63 lakh and depreciation was Rs 884.33 lakh.

• Cash from operating activities was Rs 3,232.69 lakh; capital expenditure and investments drove net investing cash outflow of Rs 6,762.73 lakh.

Outlook and guidance

• Capacity expansion of sponge iron to 235,000 MT, billets to 250,000 MT and captive power by 10 MW was expected to start production in July/August 2005; implementation was four months behind schedule due to equipment delays.

• A second-phase project for 260,000 MT of sponge iron, 150,000 MT of billets and 25 MW of power was scheduled for commissioning by September 2006.

• FY06 turnover and profitability were expected to rise, but steel price realization might not match FY05 levels; long-product prices were expected firm in the short term.