Rain Industries (RAIN) Q4 05/06 earnings summary

Executive summary

• Cement manufacturing had been transferred to a wholly owned subsidiary; standalone FY06 activity was investment-focused, while consolidated results reflected cement operations.

• Cement operations returned to profit in FY06 as turnover and production increased; the standalone holding entity recorded a substantial loss, mainly reflecting a ₹1,200 lakh finance charge.

Financial highlights

• Cement subsidiary FY06 turnover was ₹38,031 lakh vs ₹29,603 lakh in FY05; production rose to 1,468,688 tonnes from 1,269,976 tonnes.

• Cement subsidiary FY06 profit after tax was ₹45.25 lakh vs a ₹1,938 lakh loss in FY05; EPS was ₹0.25 vs negative ₹13.09.

• Consolidated FY06 net sales were ₹3,203.1 million; PBT was ₹73.5 million and PAT ₹4.5 million, vs a ₹193.8 million standalone subsidiary loss in FY05. Prior consolidated period was 18 months.

• Standalone FY06 loss after tax was ₹1,232.13 lakh vs ₹108.92 lakh for the prior 18-month period; sales were nil.

Outlook and guidance

• FY07 cement outlook was positive, with demand, prices and capacity utilization expected to improve; cost reduction and efficiency remained priorities.

• Cement demand was expected to benefit from infrastructure, irrigation and housing projects, particularly in Andhra Pradesh.

• No dividend was recommended for FY06 due to the loss and accumulated losses.