Ramkrishna Forgings (RKFORGE) Q4 04/05 earnings summary

Executive summary

• FY2004-05 turnover rose 135.92% to Rs.84.39 cr; profit after tax increased 347.97% to Rs.6.63 cr, supported by higher output and value-added products.

• Strategic shift toward automotive components advanced through expanded capacity, new products and CNC machining, while maintaining railway and defence business.

Financial highlights

• Sales and operating income Rs.84.39 cr vs Rs.35.77 cr; EBITDA Rs.10.19 cr vs Rs.4.40 cr; PAT Rs.6.63 cr vs Rs.1.48 cr.

• Cash profit increased 198.93% to Rs.8.37 cr; net sales rose 139.83%, with higher domestic revenue and exports.

• PBT was Rs.9.34 cr, including a Rs.2.14 cr exceptional depreciation write-back; profit before exceptional item and tax was Rs.7.20 cr.

• Basic EPS was Rs.5.19 on year-end capital and Rs.5.38 on weighted-average shares; proposed dividend Rs.1 per equity share, or 10%.

Outlook and guidance

• Turnover target of Rs.500 cr by FY2008-09; FY2005-06 plans included 85% capacity utilisation and average productivity of 3.5 tons per person per month.

• Value-added products targeted to contribute ~40% of revenue over two years; investment of Rs.60 cr planned for sub-assemblies by end-2006, with >35% of products expected to convert into sub-assemblies.

• Presslines planned for commissioning by September 2006, adding ~6,000 TPA; TS 16949 certification expected by September 2005.

• Growth priorities included passenger cars, two-wheelers, international markets and direct sales to International Purchasing Organisations.