Bajaj Hind profit drops 94 per cent

CORPORATE SCORECARD

With about 15 per cent drop in the sugar prices, Bajaj Hindusthan (BHL), the country's largest sugar producer has registered a 94 per cent slump in profits for the quarter ended March 31, 2007.

The profits for the quarter stood at Rs 3.66 crore compared with Rs 64 crore in the corresponding quarter last year. However, net revenues jumped by 30 per cent to Rs 514 crore compared with Rs 395 crore in corresponding quarter last year. The company's profit has seen a declining trend since the last two quarters.

"The performance is not in tune with market expectations. We were expecting a minimum profit of Rs 20 crore for this quarter," said Vikram Suryavanshi of Karvy Stockbroking. This will be a trend for most sugar companies this quarter, he added.

Significantly, the materials expenditure for the quarter increased from Rs 578.15 crore to Rs 960.94 crore, an increase of 66 per cent that came primarily from higher cane prices this year. Uttar Pradesh, the state where BHL has all its operations, had raised the cane prices by Rs 10 per quintal to Rs 125-130.

At the Bombay Stock Exchange, the share prices closed at Rs 164.95, marginally up over the previous day. However, the share prices has come down by 10.62 per cent in the past one week.

The excess sugar production and the ban on exports resulted in a precipitous fall in sugar realisations in the quarter. Lower realisations coupled with relatively lower sugar recoveries and higher cane prices have severely impacted margins from the sugar business, said a company release.

The sugar production estimate for the 2006-07 season (October-September) has been revised from 23 million tonne to 26 million tonne against a consumption of 19 million tonne. In 2005-06, the sugar production was 19.2 million tonne.