Rallis India: Well positioned

Robust performance continued at Rallis India, the agrochemicals company belonging to the Tata stable. The company reported net profit of Rs 72 crore for the year ended March 2009. But this appears to be lower on a y-o-y basis, despite strong operating growth, due to the onetime gain of Rs 87 crore in the earlier year following a land sale. For the year ended March 2009, the company reported 23% growth in net sales to Rs 856 crore and a substantial improvement in operating profit margins, leading to a 67% jump in the operating profits. Thanks to a muted growth in interest and depreciation costs, the pre-tax profits were 83% higher against the previous year. Rallis India’s strong operating performance was enabled by a jump in its international business, which now contributes nearly one-third of its revenues. The company secured long-term contracts from key customers with revenue potential of Rs 1000 crore over the next five years. In the domestic market, it was able to combat the spurt in costs through a series of price hikes totalling nearly 15% in FY09. Nearly 29% of the company’s revenues came from innovative products launched in the past four years.
For the quarter ended March 2009, the company reported 25% higher net profit at Rs 10 crore on 26% growth in net sales at Rs 187 crore. It was also able to improve its operating margins in the fourth quarter, which is typically its slowest quarter in a fiscal. The company declared a dividend of Rs 16 per share for FY 2009, which translates into a dividend yield of 3.3% on Wednesday’s closing price of Rs 492. It had paid the same dividend last year as well, albeit due to the extraordinary gains.