The Hindu Business Line : Amara Raja Q4 net rises to Rs 9 cr

MR STEVE GIBBS (right), Director, Johnson Controls Inc.; and Mr Ramachandra N. Galla, Chairman, Amara Raja Batteries; at a press conference in Chennai on Thursday. — Bijoy Ghosh

Chennai , June 22

Amara Raja Batteries Ltd has reported a net profit of Rs 9.19 crore for the fourth quarter of 2005-06, compared with Rs 48 lakh in the corresponding quarter of the previous year, a 19-fold growth.

Net sales nearly doubled to Rs 110.35 crore against Rs 64.25 crore previously.

The company's Chief Financial Officer, Mr Gopal Mahadevan, told Business Line that there were three specific reasons for the rise: Doubling of sales, favourable product mix and a different strategy in procurement of the key raw material, lead.

Higher sales would yield even higher profits because overhead costs get spread over larger volumes, he said.

Both in industrial segment as well as automotive replacement markets, the company was able to sell more of higher margin products, he said.

Also, in 2004-05 the company had provided for nearly half of the year's tax in the fourth quarter alone.

Provision for taxation in Q4 last year amounted to Rs 2.37 crore, against the full year's provision of Rs 5.95 crore.

The provision for taxation in Q4 last year, took away most of the pre-tax profits of Rs 2.72 crore.

However, in 2005-06, Amara Raja provided Rs 5 crore in the fourth quarter, which was only about a third of the Rs 13.50 crore for the full year.

Full year net up

In the full year 2005-06, Amara Raja posted a net profit of Rs 23.84 crore, up from Rs 8.60 crore in the previous year.

Sales increased to Rs 362.43 crore from Rs 218.68 crore.

Twenty per cent of the turnover came from exports.

25% dividend

The company's board of directors has recommended a dividend of Rs 2.5 a share (25 per cent).

The company is yet to take a decision on when to enter into 2-wheeler batteries.

In the current year, it plans to spend "a little more" than the Rs 9 crore it spent on marketing and brand promotion last year, which includes engaging the services of the ace motor racer, Narain Karthekeyan.