RITES (RITES) Q4 07/08 earnings summary

Executive summary

• FY07/08 gross turnover reached a record Rs. 661 crore, up 16.6% YoY; PBT also reached a record Rs. 180 crore, while PAT fell to Rs. 104 crore from Rs. 118 crore.

• New contracts secured were a record Rs. 851 crore, including Rs. 533 crore in India; year-end order book stood at Rs. 1,092.40 crore.

• Operations expanded into a 25-year Tanzania railway concession; the railway began operations in October 2007 through a subsidiary with 51% ownership.

Financial highlights

• Revenue was Rs. 660.70 crore versus Rs. 566.91 crore in FY06/07; operating turnover rose to Rs. 580.5 crore from Rs. 533.6 crore.

• PBT was Rs. 180.01 crore versus Rs. 170.71 crore; PAT was Rs. 103.82 crore versus Rs. 118.18 crore.

• Operating expenditure increased to Rs. 492.5 crore from Rs. 392.8 crore; operating surplus was Rs. 88.0 crore versus Rs. 140.8 crore.

• Treasury income rose to Rs. 31 crore from Rs. 20 crore; foreign exchange earnings were Rs. 258.13 crore and outgo Rs. 24.68 crore.

• Adjusted for the revised consultancy revenue policy, FY08 profit was higher by Rs. 2,388.60 lakh; the change reflected reversals of prior provisions and lower current-year provision expense.

Outlook and guidance

• Year-end order book was Rs. 1,092.40 crore; infrastructure investment and demand for consultancy, EPC and BOT work were identified as growth opportunities.

• Domestic infrastructure consultancy opportunities were expected from transport, urban development, highways, ports, power and construction; international prospects included railway reforms in Africa, Asia and South America.

• Mozambique railway rehabilitation was expected to finish in 2009; management expected Tanzania concession activity and leasing to support sustainable overseas business.

• Tanzania Railways’ outlook depended on asset rehabilitation and freight growth; its directors indicated potential profitability by 2011 or 2012 if planned improvements progressed as expected.