HeidelbergCement India (500292) Q4 04/05 earnings summary

Executive summary

• FY05 gross sales rose 17.5% to Rs.486.19 crore; despatches reached a record 2.22 million tonnes, while the net loss narrowed to Rs.24.79 crore.

• Net worth remained fully eroded at year-end; the BIFR reference registered in September 2004 remained pending.

• Sponge iron diversification contributed positively to results, and the MS ingot plant began production in March 2005.

Financial highlights

• Gross sales were Rs.486.19 crore versus Rs.413.32 crore in FY04; net sales were Rs.396.12 crore versus Rs.332.59 crore.

• FY05 loss before tax was Rs.24.14 crore versus Rs.35.57 crore in FY04; loss after tax was Rs.24.79 crore versus Rs.36.10 crore.

• Interest and financial charges rose to Rs.40.56 crore from Rs.35.56 crore; depreciation was Rs.20.29 crore versus Rs.20.31 crore.

• No dividend was recommended due to the loss; EPS was negative Rs.3.36 versus negative Rs.5.84 in FY04.

Outlook and guidance

• Cement performance was expected to improve in FY06, supported by productivity gains, cost controls, and an easing regional supply-demand imbalance.

• Industry growth was expected to approach 8% in FY06; stronger infrastructure and housing demand, and VAT implementation in remaining states, were expected to support prices and margins.

• Sponge iron capacity use could improve if coal availability met recommended allotments; steel ingot operations were expected to contribute positively.