TATA Group firm and agrochemicals manufacturer Rallis India came out with strong profit growth numbers, when it unveiled its results for the quarter to December 2009. The profit growth was on expected lines considering the improved industry outlook in India and the company’s initiatives at innovating, optimising costs and expanding capacities despite a sluggish exports market. The main feature of the results is the strong improvement in the company’s operating margins to 20.7% from 14% in the year ago period. This enabled the company to post a jump of nearly 50% at the PBDIT level notwithstanding a dip in net sales. Better product portfolio and working capital management helped the company in improving margins. The company’s interest cost remained insignificant, while depreciation charge slipped marginally. The resultant pre-tax profit was 57.8% higher against the December ‘08 quarter numbers. Taking into account the extraordinary items and tax, net profit rose 54.5% to Rs 24.1 crore. Rallis is investing Rs 150 crore in setting up a new plant in Dahej scheduled to be commissioned by July 2010. This plant with an annual capacity of 5,000 tonne is expected to generate cumulative revenues of over Rs 500 crore in its first three years of operations.
The company also continues to introduce new products at regular intervals and had launched Ergon, a product developed through in-house R&D. Recently, Rallis has become a subsidiary of Tata Chemicals, which bought out the stakes of other promoter group companies. Further 9.8 lakh shares were allotted to Tata Chemicals on a preferential basis during the quarter, taking the Tata Chemicals ownership in the company to 50.2%.
Coming as it is after a poor kharif season hit by erratic monsoon, the rabi season appears better compared with the yearago period, mainly due to higher cultivation acreage. Overall, the agrochemicals industry is going through an excellent phase at present, with farmers enjoying a better liquidity. The Rallis scrip, which has more than tripled from the year-ago level, gained 0.9% to close at Rs 1,061 on BSE before the results were announced. The current valuation at a price-toearnings multiple of 15.5 appears to have fairly discounted the December ‘09 quarter numbers. While the company is expected to post better numbers even for the March 2010 quarter, the improved domestic business outlook and its upcoming unit in Dahej will propel future earnings growth.
The company also continues to introduce new products at regular intervals and had launched Ergon, a product developed through in-house R&D. Recently, Rallis has become a subsidiary of Tata Chemicals, which bought out the stakes of other promoter group companies. Further 9.8 lakh shares were allotted to Tata Chemicals on a preferential basis during the quarter, taking the Tata Chemicals ownership in the company to 50.2%.
Coming as it is after a poor kharif season hit by erratic monsoon, the rabi season appears better compared with the yearago period, mainly due to higher cultivation acreage. Overall, the agrochemicals industry is going through an excellent phase at present, with farmers enjoying a better liquidity. The Rallis scrip, which has more than tripled from the year-ago level, gained 0.9% to close at Rs 1,061 on BSE before the results were announced. The current valuation at a price-toearnings multiple of 15.5 appears to have fairly discounted the December ‘09 quarter numbers. While the company is expected to post better numbers even for the March 2010 quarter, the improved domestic business outlook and its upcoming unit in Dahej will propel future earnings growth.
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