Performance for the quarter ended December 2007

For the quarter ended Dec’07 the company has reported 28% growth in net revenue to Rs 324.12 crore. However, the OPM of the company dipped by 430 bps to 9.9% on the back of increase in cost of raw material consumed and other expenditures by 390 bps and 340 bps to 75.5% and 11.6% of net revenue (net of stock adjustments). The resulting operating profit stood at Rs 32.03 crore, 11% down on Y-o-Y. The other income for the quarter stood at Rs 9.41 crore (including foreign exchange gain of Rs 2.1 crore) against 1.49 crore in corresponding previous quarter.

After considering the interest cost and depreciation charges of Rs 5.17 crore (32% higher Y-o-Y) and Rs 6.71 crore for the quarter respectively, the PBT stood at Rs 29.56 crore, up 10% on Y-o-Y. The tax expenses for the quarter declined by 32% Y-o-Y to Rs 7.25 crore (excluding the tax of Rs 2 crore for earlier years) while the effective tax rate over PBT also declined to 24.5% from 40% in corresponding previous quarter. At the end the PAT for the quarter stood at Rs 22.31 crore, 39 higher on Y-o-Y and after considering the prior period adjustment of Rs 2 crore relating to tax for earlier years, the PAT stood at Rs 20.31 crore, 26% higher on Y-o-Y.

For the nine months ended Dec’07, Finolex Cables has reported revenue growth of 30% Y-o-Y to Rs 960.56 crore. As a percentage of sales (net of stock adjustment) the cost of raw material consumed has increased by 340 bps to 78.9%, which depressed the OPM by 310 bps to 10.4%. The operating profit stood at Rs 100.20 crore, almost same on Y-o-Y.

Other Income for the nine-month period stood at Rs 44.83 crore against Rs 16 crore in corresponding previous period. The other income for the period includes foreign exchange gain of Rs 12.22 crore. The interest cost and depreciation charges for the period stood at Rs 13.99 crore and 19.67 crore respectively, 26% and 1% higher on Y-o-Y. The PBT stood at Rs 111.37 crore, up 31% on Y-o-Y. The provision for tax has increased by 22% Y-o-Y to Rs 30.45 crore (the effective tax rate declined by 200 bps to 27.3%) and resulted PAT stood at Rs 80.92 crore, up 35% on Y-o-Y. Further after considering the aforesaid prior period adjustment for Rs 2 crore, the PAT stood at Rs 78.92 crore, 31% higher on Y-o-Y.

Electrical Cables

The revenue from Electrical cables segment for the quarter ended December 2007, which constitutes 41% of total revenue, increased by 11% on Y-o-Y to Rs 188.76 crore and the segmental PBIT (73% of total PBIT) stood at Rs 22.98 crore (down 14% on Y-o-Y) with PBIT margin of 12.2% (15.8% in corresponding previous quarter).

Communication Cables

The revenue for Q3 FY08 from communication cables segment (16% of total revenue) stood at Rs 73.73 crore, up 82% on Y-o-Y. The PBIT from the segment stood at Rs 7.25 crore, 268% higher on Y-o-Y with PBIT margin of 9.83%.

Copper Rods

For Q3 FY08, the revenue from copper rods segment (42% of total revenue) stood at Rs 193.30 crore, up 40% on Y-o-Y. The PBIT from the segment stood at Rs 2.54 crore with PBIT margin of 1.3%.

In December 2007, the company entered in to a joint venture agreement with J-Power Systems Corporation of Japan to offer complete turnkey solutions in extra high voltage cable systems in India and abroad. The JV is expected to be established near Pune, in Maharashtra for manufacture and sale of high voltage power cables upto 500 kV grade.

The shares of Finolex Cables are currently quoting at Rs 99 (LTP on 31^st January 2008) at BSE.