Rallis India (RALLIS) Q4 00/01 earnings summary

Executive summary

• FY2000-01 sales fell to Rs.108,890 lacs from Rs.143,251 lacs; reported net loss was Rs.2,558 lacs versus profit of Rs.2,458 lacs in FY1999-00.

• Agricultural weakness, agrochemical overcapacity and operating-cost pressure drove the downturn; restructuring charges and provisions further weighed on reported results.

• Strategic focus shifted toward agricultural inputs and services, including the transfer of the pharmaceutical business to Shreya Life Sciences, effective 30 June 2001.

Financial highlights

• Revenue from sales was Rs.108,889.84 lacs, down from Rs.143,251.21 lacs; other income was Rs.2,084.85 lacs versus Rs.2,590.04 lacs.

• Reported loss before tax was Rs.3,070.20 lacs; reported loss after tax was Rs.2,557.68 lacs, compared with prior-year profit after tax of Rs.2,457.70 lacs.

• Materials consumed totaled Rs.79,412.37 lacs versus Rs.110,950.35 lacs; operating expenses were Rs.26,152.13 lacs versus Rs.24,981.12 lacs.

• Adjusted for restructuring items, more than Rs.12.96 crores of expenses and provisions were written off; a separate Rs.5 crore contingency provision was recorded.

• Discontinued Oriental Seritech, garments and bulk-drug operations generated losses exceeding Rs.6.66 crores; fine chemicals recorded a Rs.6.42 crore loss.

Outlook and guidance

• A better monsoon, higher agricultural output and improved produce prices pointed to Indian pesticide-market growth in FY2001-02; price realization amid competition remained a key challenge.

• New products with market potential were expected to launch in FY2001-02; management expected supply-chain savings and sales-management gains to begin flowing during the year.

• Strategic plans emphasized seed growth, own hybrid development and pilot farm-management centers combining inputs, agronomy, credit and market access.

• Management expected operational improvement from cost reduction, productivity and quality initiatives, exports and a stronger new-product development process.