There were Forex losses of Rs 25.41 crore (Forex gains of Rs 7.68 crore in corresponding previous quarter) related to losses on outstanding foreign exchange/ derivative contracts, which squashed the net profit of the company to Rs 1.80 crore (down 93% on Y-o-Y) against net profit of Rs 26.80 crore in Q2 FY08.

For the quarter ended September 2008, the company has reported 12% growth in net revenue to Rs 374.21 crore. However the growth in the company has slowed down mainly due to moderate growth in Electrical cable segment where the company could achieve just 1% Y-o-Y growth against high growth in recent past. The slow down in real estate sector has restricted the electrical cable segment growth. The OPM of the company dipped by 385 bps to 7.9% on the back of surge in raw material cost. The cost of raw material consumed surged by 660 bps to 86.6% which was partially offset by 270 bps decline in other expenses to 12.6% of net adjusted revenue. The resulting operating profit stood at Rs 29.40 crore, 25% lower on Y-o-Y. The other income for the quarter stood at Rs 13.52 crore, 338% higher on Y-o-Y.

After considering 49% increase in interest cost to Rs 6.32 crore and 24% increase in depreciation charges to Rs 8.11 crore, the PBT before Forex gains / losses stood at Rs 28.49 crore, 9% lower on Y-o-Y. There were Forex losses of Rs 25.41 crore (including loss on derivative transactions of Rs 5.62 crore and forex losses of Rs 19.79 crore, which include unrealized amount Rs 18.47 crore) against Forex income of Rs 7.68 crore in corresponding previous quarter related to gain on outstanding foreign exchange/ derivative contracts. After considering the said Forex gains / losses, the PBT stood at Rs 3.08 crore, 92% lower on Y-o-Y. The tax expenses for the quarter stood at Rs 1.28 crore against Rs 12.29 crore in Q2 FY08. At the end the PAT for the quarter stood at Rs 1.80 crore (down 93% on Y-o-Y) against net profit of Rs 26.80 crore in Q2 FY08.

For the six months ended Sep’08, Finolex Cables has reported revenue growth of 22% Y-o-Y to Rs 776.02 crore. As a percentage of sales (net of stock adjustment) the cost of raw material consumed has increased by 100 bps to 81.5%, which depressed the OPM by 80 bps to 9.9%. The operating profit stood at Rs 76.88 crore, 13% higher on Y-o-Y.

Other Income for the period stood at Rs 24.01 crore, 14% higher on Y-o-Y while the interest cost and depreciation charges for the six month period stood at Rs 12.16 crore and 14.66 crore respectively, 38% and 13% higher on Y-o-Y. The PBT before Forex gains / losses stood at Rs 74.07 crore, up 10% on Y-o-Y. After considering forex losses of Rs 59.56 crore in six months ended sep’08 (including loss on derivative transactions of Rs 29.9 crore and forex losses of Rs 29.66 crore, which include unrealized amount Rs 27.24 crore) against forex gains of Rs 14.51 crore in corresponding previous period related to gain on outstanding foreign exchange/ derivative contracts, the PBT after forex gains / losses stood at Rs 14.51 crore, 82% lower on Y-o-Y. The provision for tax for the six month period stood at Rs 5.28 crore, 77% lower on Y-o-Y (the effective tax rate increased by 800 bps to 36.4%) and resulted PAT stood at Rs 9.23 crore (84% lower on Y-o-Y) against Rs 58.61 crore net profit in corresponding previous period.

Electrical Cables

The revenue from Electrical cables segment for the quarter ended September 2008, (40% of total revenue), increased by 1% Y-o-Y to Rs 209.18 crore and the segmental PBIT (74% of total PBIT) dipped by 22% Y-o-Y to Rs 26.10 crore with PBIT margin of 12.5% (16.1% in corresponding previous quarter). The capital employed in this segment stood at 390.19 crore, up 21% Y-o-Y on 30^th September 2008.

Communication Cables

The revenue for Q2 FY09 from communication cables segment (15% of total revenue) stood at Rs 76.63 crore, up 29% on Y-o-Y. The PBIT from the segment stood at Rs 8.31 crore, 239% higher on Y-o-Y with PBIT margin of 10.9% (4.1% in Q2 FY08). The capital employed in this segment stood at 251.45 crore, up 4% Y-o-Y on 30^th September 2008.

Copper Rods

For Q2 FY09, the revenue from copper rods segment (44% of total revenue) stood at Rs 232.96 crore, up 13% on Y-o-Y. The PBIT from the segment dipped by 42% Y-o-Y to Rs 1.63 crore with thin PBIT margin of 0.7% (1.4% in Q2 FY08). The capital employed in this segment stood at 90.20 crore, up 224% Y-o-Y on 30^th September 2008.

The shares of Finolex Cables are currently quoting at around Rs 31 (LTP on 16^th September 2008) at BSE.