Pakka (516030) Q4 2006 earnings summary

Executive summary

• FY 2006 turnover rose 13.9% to Rs 34.13 cr; record production and sales supported growth, while Q4 input-cost inflation caused a Rs 0.61 cr net loss.

• PM3 expansion was nearing completion, with paper-machine commissioning expected by May 2007 and substantial added capacity intended to support profitable growth.

Financial highlights

• Turnover increased 13.9% to Rs 34.13 cr; sales volume rose 5.87% to 16,368 MT and average realisations increased 7.59% YoY.

• EBITDA rose 28.31% to Rs 3.91 cr; EBITDA margin expanded 129 bps to 11.44% from 10.15%.

• PBT increased 84.53% to Rs 1.79 cr; PAT grew 10% to Rs 1.10 cr, while EPS was Rs 0.53 versus Rs 0.90.

• Excluding the Q4 net loss of Rs 0.61 cr, FY net profit would have been Rs 2.33 cr, up 133% YoY.

• Exports increased 52.25% to 1,891 MT and represented 11.55% of sales tonnage, versus 8.03% in 2005.

Outlook and guidance

• PM3 commissioning was expected by May 2007; full operation of allied infrastructure was targeted by the beginning of Q2 2007.

• After commissioning, installed capacity was expected to reach 39,100 MT annually; surplus pulp, power and recovery capacity could support further paper expansion by end-2007.

• Directors expected much better 2007 results, citing firm paper prices and anticipated controlled input costs.

• Management anticipated ongoing growth in specialty-paper demand and intended to increase production organically or inorganically using surplus infrastructure.