Rajratan Global Wire (517522) Q4 06/07 earnings summary

Executive summary

• FY07 sales fell to ₹109.22 crore from ₹113.07 crore; profit after tax declined to ₹3.29 crore from ₹5.97 crore amid raw-material inflation and import pricing pressure.

• Strategic focus shifted to tyre bead wire: the low-margin PC wire business was being phased out, while a Thailand facility was advanced for production from September 2007.

Financial highlights

• Sales ₹109.22 crore vs ₹113.07 crore; profit before tax ₹5.08 crore vs ₹8.71 crore; net profit ₹3.29 crore vs ₹5.97 crore.

• Gross profit before depreciation and tax ₹7.83 crore vs ₹10.97 crore; depreciation ₹2.75 crore vs ₹2.27 crore.

• Dividend recommended at ₹1.00/share, or 10%, vs ₹2.00/share in FY06; ₹2.50 crore transferred to general reserve.

• Windmills with 2.25 MW total capacity generated gross earnings of ₹1.27 crore in FY07.

Outlook and guidance

• FY08 performance expected to improve, subject to unforeseen contingencies; piped LNG availability was expected to lower conversion costs, with improved tyre-maker profitability supporting price increases.

• Thailand project’s first phase targeted production from September 2007; total planned investment was US$13.6 million over the following year.

• Capacity was expected to reach 55,000 MT by 2009 as additional capacity came on stream.