Lords Chloro Alkali (500284) Q4 06/07 earnings summary

Executive summary

• FY07 sales rose 36% YoY to Rs. 7,056.57 lakh; caustic soda output increased 38% to 27,939 MT, while reported net profit was driven by exceptional debt-relief gains.

• Operating improvements reflected higher capacity utilization, efficiency measures and marketing; the 230-TPD caustic soda expansion was underway.

Financial highlights

• Sales were Rs. 7,056.57 lakh vs Rs. 5,201.07 lakh; other income was Rs. 211.31 lakh vs Rs. 57.89 lakh.

• Operating profit before interest, depreciation and exceptional items was Rs. 302.31 lakh vs Rs. 145.95 lakh; net profit was Rs. 23,156.38 lakh vs net loss of Rs. 4,731.61 lakh.

• Excluding exceptional items, FY07 loss after tax was Rs. 155.24 lakh; exceptional items included Rs. 23,598.85 lakh of interest and other liabilities written back and a Rs. 287.23 lakh loss on share sales.

Outlook and guidance

• The 230-TPD brownfield expansion was expected to finish by end-Jan 2008, with commercial production targeted for Mar 2008; caustic soda capacity would rise from 107 to 337 TPD.

• Management expected the expansion to lift turnover and profitability, with cost reductions from scaling operations; the domestic caustic soda industry was forecast to grow 8%-10% annually.