THE expansion project of Aries Agro, the Mumbai-based manufacturer of micro-nutrients for agriculture, continues to be on track as it inaugurated its seventh plant at Lucknow recently. Earlier this year, the company had inaugurated one plant at Hyderabad and another at Ahmedabad. This took its production capacity to 84,600 tpa compared to 21,600 tpa at the time of its IPO in December ’07. But the company is deferring its eighth plant in Panvel to March ’09, as it has sufficient capacity for this year and it also wants to benefit from falling lease rentals. The company has launched 40 vans for mobile marketing, which will be scaled up to 100 by the end of December. Golden Harvest, the company’s 75% subsidiary in the UAE, has also commissioned production since November '08.
The company typically derives 45% of its annual revenues in the first half of the financial year and 55% in the second half. Taking into account its revenue of Rs 54 crore in the first half, the company appears well-poised to achieve its target of Rs 125 crore in FY09. It plans to sell over 45,000 tonnes of products in FY09, compared to 24,600 tonnes in FY08. Aries Agro’s profit in the first half of FY09 was adversely affected due to a rise in raw material expenses. Input costs jumped 44% even though the company scaled down staff and other manufacturing costs. However, the company implemented a price hike in mid-October, which should help it to improve its margins. The company imports a major chunk of its raw materials. But it had stocked on inventories heavily in June and July. So, it no longer needs to import any raw materials this fiscal, which will safeguard it from the rupee’s fall versus the dollar. Most of the company’s products are slow-starters, as establishing concept and gaining farmers’ acceptance takes time. In view of its additional capacities, aggressive marketing strategies and unique position in the domestic market, the company appears to be an attractive pick for long-term investors.
The company typically derives 45% of its annual revenues in the first half of the financial year and 55% in the second half. Taking into account its revenue of Rs 54 crore in the first half, the company appears well-poised to achieve its target of Rs 125 crore in FY09. It plans to sell over 45,000 tonnes of products in FY09, compared to 24,600 tonnes in FY08. Aries Agro’s profit in the first half of FY09 was adversely affected due to a rise in raw material expenses. Input costs jumped 44% even though the company scaled down staff and other manufacturing costs. However, the company implemented a price hike in mid-October, which should help it to improve its margins. The company imports a major chunk of its raw materials. But it had stocked on inventories heavily in June and July. So, it no longer needs to import any raw materials this fiscal, which will safeguard it from the rupee’s fall versus the dollar. Most of the company’s products are slow-starters, as establishing concept and gaining farmers’ acceptance takes time. In view of its additional capacities, aggressive marketing strategies and unique position in the domestic market, the company appears to be an attractive pick for long-term investors.
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