Pakka (516030) Q4 2005 earnings summary

Executive summary

• Record 2005 production, sales volume and revenue; higher raw-material and operating costs sharply reduced profit.

• Expansion plans target higher-value speciality and MG poster paper, supported by a new paper machine, recovery boiler and captive power plant.

Financial highlights

• Gross turnover rose 5.76% to Rs 30.34 cr in 2005; production increased 2.03% to 15,063 MT and sales volume rose 6.26% to 15,460 MT.

• Net profit fell 36.87% to Rs 1.00 cr from Rs 1.59 cr; PBT declined 63.59% to Rs 0.97 cr.

• EBITDA decreased 36.87% to Rs 3.04 cr; EBITDA margin fell to 10.01% from 16.80%, while net margin declined to 3.29% from 5.54%.

• Average realizations eased to Rs 19,628.32 per tonne from Rs 19,720.33; operating expenses grew faster than income amid higher input costs.

Outlook and guidance

• 2006 priority: commission PM3 by October, with construction progressing and major equipment orders placed; management expected better results as paper prices firmed and input costs came under control.

• PM3 was planned as a 70 TPD MG poster paper unit, with flexibility across grades and colours; total installed capacity was projected to reach 39,100 MT per year.

• Longer-term Vision 2025 milestones: India’s largest speciality-paper maker by 2010, Asia’s largest by 2020 and the world’s largest by 2025.

• Management planned a 50,000-hectare captive plantation initiative to support future capacity expansion.