Highlights of the call

The company’s net sales for the quarter ended September 2008 increased by 43% to Rs 63.53 crore. The exports revenue contribution was 64%. The company has reported net profit of Rs 4.26 crore, a growth of just 9% due to notional loss of Rs 2.10 crore on account of forex.

The company had other operating income of Rs 1.59 crore out of which Rs 1.09 crore is exchange gain.

Net sales for the half year ended September 2008 increased by 35% to Rs 109.90 crore. The company had reported net profit of Rs 9.41 crore, a growth of just 36% due to notional loss on account of forex.

For the quarter, the company’s raw material cost as a percentage of sales has gone up due to raw materials likes inks and others, which are not so major, have also seen rise in their prices which was not pass on to consumers. However, major raw material cost i.e. paper, which has seen marginal price increase in the quarter, is mostly pass on to customers.

There was a growth in interest cost during the quarter due to increase in turnover and working capital.

During the quarter, the exports to Africa contribute 95% of export revenue while remaining came from Europe, UK, US.

The company has signed additional contracts worth $ 2 millions with Pearson and $ 4 million with Longman.

The company’s Annual Report publishing is growing at 40% and Education Publishing business at 40% to 42% rate.

The company’s long term debt on book is Rs 28 crore and working capital is Rs 45 crore. Going forward, the company will see increase in working capital due to increase in top line.

Total Rs 28 crore debt is in foreign currency while working capital is in both Rupee and in foreign currency.

The cost of debt is Libor + 350 basis points and Libor is fixed.

The company expects its tax rate to fall down to 15% to 18% after its Surat plant begin operation which is located in a SEZ. Vashi plant is currently operating at an effective tax rate of 20% to 21%.

The company is currently having an order book of Rs 45 crore which will be executed in this quarter.

The company had spent uptil now Rs 28 crore for its Surat green filed project. The company’s first phase of project implementation will end by Q3 and commercial production will start from Q4. At present the company is carrying out trail production. Once completed, the Surat plant will be able to generate Rs 120 crore of revenue, when run at full capacity.

At present, 58 people are working in Surat plant, which will rise to 120 to 130 people at full capacity.

The company’s debtor days have come down from Rs 131 days to 119 days, which will be in future reduced to 70 days. The normal cycle of debtor days in industry is of 120 days.

The company had done an outsourcing of Rs 15 crore to Rs 16 crore for the quarter.

The company expects a growth of 30% at its top line for FY09.

The company is targeting an operating profit margin of 20% to 22% for FY09 on the back of better realization, commercial start of Surat plant and operating efficiency.

The company sees gain from the depreciation in Rupee as this will make their export cheap while there margin will remain same as raw material are sourced in Rupee terms.

The company is also open for inorganic expansion.