M M Forgings (522241) Q4 07/08 earnings summary

Executive summary

• FY08 sales rose 8.2% YoY to Rs 19,094.54 lakh; profit after tax was Rs 1,478.86 lakh.

• Export-led operations remained central, with exports at Rs 11,255.01 lakh, or 58.94% of sales; domestic sales grew 11%.

• Capacity expansion, higher machining capability and product development supported plans for further growth, while global volatility and higher steel prices shaped operating risks.

Financial highlights

• Sales were Rs 19,094.54 lakh vs Rs 17,646.45 lakh in FY07; other income was Rs 596.05 lakh vs Rs 565.01 lakh.

• Profit before tax was Rs 2,058.76 lakh vs Rs 1,875.29 lakh; profit after tax was Rs 1,478.86 lakh vs Rs 1,408.29 lakh.

• Raw material costs rose to Rs 8,790.53 lakh from Rs 8,208.72 lakh; personnel costs increased to Rs 1,673.75 lakh from Rs 1,224.63 lakh.

• Capital expenditure was Rs 4,749.46 lakh, up from Rs 3,237.78 lakh; net cash from operating activities was Rs 609.30 lakh vs Rs 3,365.43 lakh.

Outlook and guidance

• Targeted capacity increase from 35,000 MT to 38,000 MT; FY09 plans called for 125–150 new part developments, up from 92 in FY08 and 47 in FY07.

• Priorities included filling available capacity, improving equipment uptime, reducing costs and energy use, and continuing the shift toward renewable power.

• An ERP system was expected to be in place in Q3 FY09; production and sales growth remained subject to market conditions.