Lords Chloro Alkali (500284) Q4 11/12 earnings summary

Executive summary

• Plant operations were shut from 25 July 2011 for a major equipment revamp; the shutdown sharply reduced sales and resulted in a net loss of Rs. 822.89 lakh.

• Restart plans prioritize revamping the 107 TPD Asahi unit, followed by the 120 TPD UHDE unit; power reconnection and equipment delivery are key dependencies.

Financial highlights

• FY2011-12 sales were Rs. 2,912.31 lakh vs. Rs. 13,264.34 lakh in FY2010-11; net revenue after excise was Rs. 2,670.52 lakh vs. Rs. 12,149.31 lakh.

• Operating profit/(loss) before interest, depreciation and exceptional items was a loss of Rs. 779.37 lakh vs. profit of Rs. 836.90 lakh; net loss was Rs. 822.89 lakh vs. net profit of Rs. 139.46 lakh.

• Total expenses were Rs. 4,140.29 lakh vs. Rs. 12,090.62 lakh; power and fuel costs were Rs. 1,595.08 lakh vs. Rs. 7,516.02 lakh.

• Other income of Rs. 208.10 lakh included Rs. 98.05 lakh from fixed-asset sales and Rs. 57.04 lakh of provisions/miscellaneous balances written back.

• Operating cash flow was negative Rs. 78.40 lakh; investing activities generated Rs. 193.27 lakh and cash equivalents increased by Rs. 70.35 lakh to Rs. 101.29 lakh.

Outlook and guidance

• Revamp of 107 TPD Caustic Soda capacity was targeted for commissioning in FY2012-13; the additional 120 TPD capacity was planned for FY2014-15.

• Term-loan assistance was being sought from bankers for the 107 TPD work; an investment in a Sodium Hypo plant was proposed for treatment of waste chlorine.

• Management expected the revamp to lower production costs and support a return to profitability; technical consultant J.B. Sharma’s recommendations were being implemented.