Rallis India (RALLIS) Q4 96/97 earnings summary

Executive summary

• FY1996-97 sales rose to Rs. 116,258.88 lakh from Rs. 96,984.57 lakh; profit after tax was Rs. 2,280 lakh versus Rs. 2,226.73 lakh, despite adverse business and agroclimatic conditions.

• Growth required higher borrowing and interest costs; net block increased 40%, while interest charges rose to Rs. 4,449.31 lakh from Rs. 2,736.58 lakh.

• A 45% dividend was recommended, unchanged from the prior year; Rs. 3,500 lakh of 14% cumulative redeemable preference shares were issued in two tranches.

Financial highlights

• Sales were Rs. 116,258.88 lakh versus Rs. 96,984.57 lakh; other income was Rs. 833.37 lakh versus Rs. 826.55 lakh.

• Operating profit before interest, VRS and depreciation was Rs. 8,505.21 lakh versus Rs. 6,636.54 lakh; PBT was Rs. 2,497.96 lakh versus Rs. 2,456.73 lakh.

• PAT was Rs. 2,280 lakh versus Rs. 2,226.73 lakh; an Rs. 80 lakh prior-year adjustment was recorded separately.

• VRS charges of Rs. 710.27 lakh were a one-time expense; excluding this charge, the reported operating results included the cost of the scheme.

Outlook and guidance

• Ankleshwar pesticide plant was operating at full capacity; prospects for the subsidiary's FY1997-98 were described as bright, with a profit expected.

• R&D was focused on agrochemicals for domestic and export markets, with new products planned for introduction over the next two years.

• Management identified financial rearrangements and lower operating costs as priorities to reduce interest burden and protect growth.