Rallis India (RALLIS) Q4 04/05 earnings summary

Executive summary

• FY05 marked a return to operating profitability after a restructuring and turnaround; operating profit before exceptional items was Rs 38.15 crore versus a Rs 46.67 crore loss in FY04.

• Pesticide sales grew 27%, ahead of 13% industry growth, while export sales rose 25%; management described FY05 as progress, not yet a sustained turnaround.

Financial highlights

• Sales were Rs 548.12 crore versus Rs 489.19 crore; total income including other income was Rs 593.78 crore versus Rs 528.25 crore.

• Profit before interest, depreciation, tax and exceptional items was Rs 68.75 crore versus Rs 9.92 crore; profit after tax was Rs 33.50 crore versus Rs 25.55 crore.

• FY05 PAT was mainly operational; FY04 PAT was substantially supported by gains from sale of Ralli House and the gelatin business.

• Exceptional items were a Rs 3.99 crore expense in FY05 versus Rs 72.86 crore income in FY04, principally reflecting prior-year disposal gains.

• Basic and diluted EPS was Rs 21.72 versus Rs 20.33; proposed equity dividend was 10%, alongside a proposed 7.5% preference dividend including accumulated dividend.

Outlook and guidance

• Management expected improvement in productivity and profits to continue in FY06 and beyond, while emphasizing that sustained superior performance remained the challenge.

• FY06 plans included launches for brown plant hopper control in rice and Spodoptera control in cotton and other crops, plus expanded farmer contact and brand promotion.

• Growth opportunities included Bt cotton acreage, demand for sucking-pest insecticides and specialty fertilizers, and distribution of a Bt variety under its own brand.