For the year ended March 2005 the company showed a 25% rise in sales to Rs 570.76 crore and a 96% rise in OP to Rs 55.94 crore. However due to significant rise in tax provision the net profit marginally went up by 4% to Rs 30.77 crore.

Currently the company derives 70% of the electrical cable revenue from the retail segment where the realization has been faster and higher. This has considerably reduced the concerns of margin squeeze due to the rise in price of copper, the main raw material (almost 68% of raw material in value terms) for the company.

The company expects to receive an order of 1200 TCKM of Jelly filled telephone cables from BSNL, which is to be executed during the subsequent period by the company. This may improve the performance (loss of Rs 3.25 crore for the quarter) of communication cable segment of the company, which is performing badly due to lack of orders commensurate to the capacity developed.

Quarterly Analysis

With respect to the corresponding quarter last year Finolex Cables has shown a 7% decline in sales to Rs 124.06 crore in the quarter ended June 2005. However with a huge 120 BP rise in OPM the company’s operating profit zoomed 8% to Rs 10.63 crore. The rise in OPM is mainly due to the relative decrease in costs and is mainly related to raw materials with respect to the sales made. The raw materials cost as a percentage of adjusted sales have gone down by 530 BP to 71.5% but the same for staff costs and other expenses have gone up by 90 BP and 300 BP to 5.5% and 14.7% respectively.

As a result the total cost as a percentage of adjusted sales has gone down by 150 BP to 91.7%. Other income jumped by 59% to Rs 11.64 crore and interest declined by 43% to Rs 2.23 crore. Thus the PBDT increased by 51% to Rs 20.04 crore. Depreciation provision decreased by 4% to Rs 5.98 crore. So the PBT increased by 100% to Rs 14.06 crore. There was no EO expense this year as well as in the corresponding quarter last year. The deferred tax asset was Rs 50 lakh as compared to a liability of Rs 4 lakh reported last year. The company has reported a fringe benefit tax of Rs 6 lakh this quarter (nil last year). So the net profit jumped by 77% to Rs 12 crore.

Segment Results

The electrical cables (EC) segment of the company has registered a significant 55% rise in revenue at 84% sales mix. The profit margin in this segment has decreased from 15% to 14% in the quarter. The Communication Cables (CC) segment showed a 67% decrease in sales and remain loss making but the loss is reduced by 53% to Rs 3.25 crore as compared to the corresponding period last year. On the other hand the Other segment has registered a sales decline of 77% to Rs 3.56 crore and went in to loss with a loss of Rs 32 lakh as compared to the last corresponding quarter last year.

Yearly Analysis

In the full year ended March 2005 the sales of the company went up by 25% to Rs 570.76 crore, where 68% came from electrical cables and 26% came from communication cables. The OPM has witnessed a rise of 350 BP to 9.8% in the year and the OP increased by 96% to Rs 55.94 crore. Other income had declined by 67% to Rs 16.73 crore.

The interest cost and depreciation both have witnessed a decline of 42% and 2% to Rs 9.68 crore and Rs 25.86 crore respectively. So the PBT before EO went up 2% to Rs 37.13 crore. There was an EO expense of Rs 3.69 crore registered last year as compared to nil this year. So the PBT after EO went up 14% to Rs 37.13 crore. But with a 163% rise in current tax and 11% rise in deferred tax to Rs 5.25 crore and Rs 1.11 crore respectively, the net profit for the year increased marginally by 4% to Rs 30.77 crore.

Valuation

The shares of the company are trading at Rs 270 in the bourses.