Rallis India (RALLIS) Q4 05/06 earnings summary

Executive summary

• Second consecutive year of turnaround: net profit rose to Rs. 42.52 crore from Rs. 33.50 crore, despite weak industry conditions and lower second-half margins.

• Domestic sales grew against an industry contraction; export growth and stronger fungicide performance supported results, while profits were weighted toward H1.

Financial highlights

• Sales were Rs. 591.35 crore vs Rs. 541.09 crore; other income was Rs. 39.00 crore vs Rs. 53.32 crore, taking total income to Rs. 630.35 crore vs Rs. 594.41 crore.

• PBT increased to Rs. 44.54 crore from Rs. 34.16 crore; PAT rose to Rs. 42.52 crore from Rs. 33.50 crore.

• EPS was Rs. 29.21 vs Rs. 21.72; equity dividend recommended at 40% vs 10%, alongside the 7.5% cumulative redeemable preference dividend.

Outlook and guidance

• 2006-07 pesticide-industry growth drivers identified as a normal monsoon and increased acreage under cotton, paddy and chillies, alongside pest incidence.

• Growth priorities include seeds and international business; management expected performance improvement to continue in the current year and beyond.

• Marketing plans include farmer outreach, help-line and call-centre services, trade-channel partnerships and brand-building campaigns.