Rallis India (RALLIS) Q4 02/03 earnings summary

Executive summary

• FY03 ended with a net loss of Rs.77.27 crore, versus profit after tax of Rs.58.75 crore in FY02; severe drought, low pest pressure and legacy provisions drove the deterioration.

• Management acknowledged insufficiently sustained execution on cost control, cash collection, debt reduction and old-stock clearance; a turnaround plan targets sharper execution and balance-sheet repair.

• No equity dividend was recommended for FY03 due to the loss.

Financial highlights

• Sales were Rs.845.89 crore versus Rs.985.83 crore; sales plus other income totaled Rs.882.52 crore versus Rs.1,014.86 crore.

• Loss before exceptional items and tax was Rs.56.86 crore, versus Rs.57.78 crore; exceptional items were a net charge of Rs.23.83 crore versus a net credit of Rs.102.44 crore in FY02.

• Loss before tax was Rs.80.69 crore; tax benefit was Rs.3.42 crore, including deferred tax credit of Rs.18.69 crore and a Rs.5.20 crore current-year provision; net loss was Rs.77.27 crore.

• Basic and diluted EPS was (Rs.64.47) including exceptional items and (Rs.44.59) excluding exceptional items, versus Rs.47.39 and (Rs.38.08), respectively, in FY02.

• Operating cash flow was Rs.32.25 crore; cash and bank balances closed at Rs.21.85 crore versus Rs.43.30 crore a year earlier.

Outlook and guidance

• FY04 performance was expected to improve with a normal monsoon, increased crop acreage and stronger agro-input demand; high pesticide inventories could mute the kharif recovery.

• Priorities included large-scale cost reduction, improved market servicing, cash management, balance-sheet restructuring, new products and stronger controls and processes.

• FY04 pesticide marketing would emphasize paddy, vegetables, fruits, pulses and oilseeds, with aggressive brand promotion and farmer outreach; a marginal cotton decline was expected.

• Fine Chemicals planned to defend its leading domestic gelatin position while expanding exports through production, quality, cost and working-capital improvements.