The Hindu Business Line : Rallis net doubles on good monsoon

Mumbai, Oct. 12 Favourable monsoon conditions, increase in support price for farmers and pest occurrence in farm lands to some degree enabled agro-chemicals major Rallis India, a Tata Group company, to more than double its net profit for the second quarter of the current fiscal as compared to the year-ago period.

It notched up its highest ever quarter net profit of Rs 101.88 crore, as against Rs 43.85 crore in the second quarter of the previous fiscal. Its net profit for the first half of the current fiscal was Rs 103.30 crore, as against Rs 58.14 crore for the whole of the previous fiscal.

With demand for agro-chemical products registering robust trends, the company could clock a net turnover from operations of Rs 246.77 crore(Rs 211.72 crore). Its other income, including profit from sale of land, was Rs 87.63 crore (Rs 54.34 crore).Rallis India, presently the second biggest domestic player in this segment, feels that the market demand would remain stable in the ensuing quarters.

“What was encouraging about the monsoon this year was that it was well-distributed. And this has improved water availability, with reservoir levels being healthy. Also, with the increase in support prices improving the affordability of the farmers, I feel there will be normal crop coverage and hence steady demand for the rabi,” Mr V. Shankar, CEO and executive director of the company, told presspersons.

A significant aspect of the company’s balance sheet was that its net interest burden came down to Rs 97 lakh during the quarter, as against Rs 3.28 crore in the corresponding quarter of the last fiscal. This was possible after the company almost erased its debt from its balance sheet. “Apart from the debt reduction, our working capital management, including inventory cuts, and cash management schemes helped bring down the interest burden,” according to Mr Soumen Mitra, Executive Vice-President (Finance and Legal).

Impact of rising rupee

With the company sharpening its focus on exports, the rupee appreciation did have some impact on its revenue. “We could, however, counter this impact with our natural hedges. For example, we also import significant quantities of raw materials, which acted as a natural hedge. Also we moved to other currencies to further reduce the impact,” Mr Shankar said. The company’s stock closed 0.76 per cent higher at touch Rs 454.45 on Friday.