Though the fertilizer segment performed badly during the quarter the chemicals division showed improved performance. Ammonium Nitrate and Nitric Acids business grew by 31% on an year-on-year basis. IPA and propane sales increased to Rs. 64.11 crore during the quarter ended December 2007. Higher raw material cost and lower availability of gas impacted the operating performance during the quarter.

The net profit fell due to higher provision of tax during the quarter, which increased by 188% to Rs 11.27 crore and has resulted in the company posting a fall in profit during he quarter. The net profit fell by 1% to Rs 24.47 crore during the quarter.

Performance for the quarter ended December 2007

During the quarter ended December 2007 the Company posted a revenue growth of 13% to Rs 273.99 crore mainly driven by the revenue of the industrial chemicals business of the company during the quarter. There has been significant increase in cost of rock phosphate and sulphur in the international market, which has significantly impacted the profitability of the company. The operating profit margin though went down only marginally by 20 basic points during the quarter to 16.5%. The total raw material cost as a percentage of net adjusted sales increased significantly during the quarter by 730 basic points as compared to the same period last year. It was Rs 95.26 crore which was 34% of the net adjusted sales. The employee cost also increased by 40 basic points during the quarter. However the cost of purchase of traded goods fell during the quarter to 42.9% of adjusted sales as compared to 57% during the corresponding quarter of the previous year mainly because of the fall in traded fertilizers during this period. The absolute operating profit as a result increased by 11% to Rs 45.08 crore as compared to the same period last year.

The other income of the company during the quarter on the other hand fell by 12% to Rs 45.08 crore whereas the interest cost increased significantly by 55% to Rs 3.76 crore. The depreciation allowance increased by a benign 3% to Rs 11.35 crore, as a result the profit before tax and extraordinary gain increased by 6% to Rs 36.35 crore as compared to the same period last year. The effective tax rate increased significantly during the quarter to 32% as compared to 28% during the same period last year, hence the company posted a minor fall in net profit which fell by 1% to Rs 24.47 crore during the quarter ended December 2007 as compared to the corresponding quarter of the last year.

Performance for the nine-month period ended December 2007

Top-line increased by 14% to Rs 710.68 crore during the nine-month period ended December 2007 as compared to the corresponding period last year. The operating profit margin though fell by nearly 300 bps during the period as a result of which the company managed to post an Operating profit of Rs 115.98 crore which was just 12% higher compared to the same period last year. The fall in OPM margin was mainly due to increase in raw material cost during the period which has gone up significantly by 920 basic points to 35% of net adjusted sales as compared to the same period last year. The employee cost and other operating cost also went up 80 bps and 60 bps respectively, whereas the cost of traded goods fell during the period.

However there was a significant jump in other income during the quarter, which increased by 36% to Rs 31.88 crore as a result the PBIDT during the period increased by 17% to Rs 147.86 crore. The interest cost and the depreciation cost was up by 52% and 18% to Rs 11.81 crore and Rs 32.80 crore respectively as a result the profit before tax before EO increased by 13% to Rs 103.25 crore as compared to the same period last year.

The was an extraordinary expense of Rs 33 lakh during the period as compared to 1.47 crore during the same period last year as a result the profit before tax after EO increased by 15% to Rs 102.92 crore as compared to the same period last year.

The tax expenses went up by 3 times to Rs 35.21 crore during the period, hence the net profit increased by a benign 6% to Rs 68.93 crore as compared to the same period last year.

Chemicals:

The Chemicals business constitutes a major 75% of the total revenue of the company during the quarter ended December 2007. The revenue from the chemicals business grew by 28% to Rs 211.56 crore during the quarter as compared to the same period last year. Ammonium Nitrate and Nitric Acids business was up by 31% and the IPA and propane sales up to Rs. 64.11 crore as compared to the same period last year.

ƒnThe sales of the chemicals manufactured by the company grew by 30% whereas the traded chemicals business grew by 16% during the quarter. The profit from the segment during the quarter fell marginally by 1% to Rs 52.43 crore as compared to the corresponding quarter of the previous year.

For the nine-month period ended December 2007 the Chemicals segment business grew by 31% to Rs 519.42 crore. The traded chemicals however posted a de-growth of 15% during the nine month period.

Fertilizers:

The fertilizers segment of the business constituted 24% of the total revenue during the quarter. The revenue from this segment fell by 19% to Rs 68.27 crore whereas the segment posted a loss of Rs 5.51 crore during the quarter. The drop in revenue was due o unavailability of phosphoric acid during the quarter.

The price of the major input required by the company for manufacturing nitro phosphate fertilizers has been increasing steadily during the past several months, which has in turn put a lot of pressure on the operating margins. Added to this the delay in getting subsidy payment dented the profitability.

The retail business, Ishanya, registered its first income from lease rentals during the quarter. The mall has opened over 200,000 square feet with over 1,000 brands during the quarter.

Recent Developments

The work on the new 15,000 MT ammonia storage tank is well underway and the tank is expected to be ready in 2008-09. The Company is also well positioned to take on further capacity enhancements in the Nitric Acid segment. The Company¡¦s Chemical Complex project at Paradip in Orissa is progressing well.

Ishanya has now opened over 200,000 square feet of retail space with key anchors Home Town, @home and Croma, besides key stores like F&F, Ecoscapes and Bella Casa now open to customers. More openings are expected in the coming weeks with approximately another 50,000 sq.ft. opening up by the end of February 2008.

The Dahej-Uran pipeline has been completed and the company saw the first drawing of a small test quantity of LNG during this quarter. The company is now seeking to finalize agreements for the further supply of Natural gas and LNG.

The promoters¡¦ stake stands at 42% as at the end of December 2007.

The scrip is currently trading at around Rs 119 per equity share on the BSE.