Godavari Fertilisers and Chemicals Limited financial results
Net profit up by 89 per cent, Dividend doubled

Chennai, 18 April 2007: The Board of Directors of Godavari Fertilisers and Chemicals Limited (GFCL) today has approved the audited financial results for the year ended 31st March 2007.

GFCL reported an impressive performance during the year 2006-07. This is the fourth successive year of profitable growth since its take over from Government of Andhra Pradesh in July 2003. Continuous efforts of the management on all fronts have benefited the Company resulting in a significant growth in Profit Before Tax. However, the Company's operations were affected by a) shortage in phosphoric acid, b) delay in receipt of subsidy and c) non reimbursement of freight increases. To achieve a reasonable return in this business the Company has appealed to the Government to expedite release of subsidy payments and reimburse the actual increase in freight cost.

The Company has set new milestones and production volume touched all time high record 11.35 lakh MT (previous year10.24 lakh MT). At the time of takeover of the Company in 2003, production was 7.43 lakh tonnes. Higher production was achieved by de bottlenecking and process changes, without any major capital expenditure during the last four years. Higher productivity has been accompanied by significant improvement in efficiencies of raw material and energy usage.

Sale of manufactured products was 11.28 lakh MTs (previous year 10.20 lakh MT). The Company's realization from sale of products has improved significantly on account of better logistics management, increased market share in addressable markets and tight control over distribution costs.

Sales turnover increased by 18 per cent to Rs.1,800 crore (previous year Rs.1,520 crore), During the year, the Company has entered and strengthened its market presence in water soluble fertilisers, micronutrients and G-Sulphur which are complementary to the DAP and complexes manufactured and marketed by the Company. The Company has a wide retail dealer network comprising of over 8000 dealers in 6 States.

Innovative schemes launched by the Company to support rural Girl child education and to recognize best practices adopted by farmers (Rythu Puraskaram) have been widely appreciated by both government agencies as well as the press and media.

Financials
EBITDA achieved for the year Rs.116.95 crore (previous year: Rs.68.32 crore) was higher by 71 per cent. This is an all time high since the Company's inception in 1981. Interest and Depreciation accounted for Rs.35.91 crore (previous year: Rs.18.31crore) and Rs.6.65 crore (previous year: Rs.7.98 crore), respectively. Higher borrowings consequent to delays in subsidy inflows and higher interest rates have adversely affected the Company and also the industry as a whole.

Earnings Before Tax improved consecutively for four years in a row to Rs.74.39 crore (previous year Rs.42.03 crore) recording an increase of 77 per cent. The Company had reported a loss of Rs.20.24 crore at the time of acquisition in 2003.

Provision for Taxes stood at Rs.25.10 crore (previous year: Rs.15.93 crore) and Profit After Tax increased by 89 per cent to Rs.49.29 crore (previous year Rs.26.11crore). Earning Per Share significantly increased to Rs.15.40 (previous year Rs.8.16).

The Board has recommended payment of dividend at 40 per cent (previous year 20 per cent).

New Projects
A new ammonia storage tank of 10,000 MT capacity was commissioned during the year at a cost of Rs.19.25 crore. This would augment the ammonia storage capacity and reduce procurement cost.

During the year the Board has approved an expansion project at an estimated cost of Rs.82 crore to increase the production capacity by 4.25 lakh tonnes. The project proposal received support from all quarters, including environmentalists, at the public hearing conducted by APPCB. The proposal is pending before the Ministry of Environment & Forests, Government of India. This project is expected to be commissioned during early 2009.

During the year, the Company has migrated to an improved ERP System (SAP 4.7 Enterprise version) and has also automated the frontline sales transactions.

Increase in stake by Murugappa Group
Coromandel Fertilisers Limited (CFL), part of Murugappa Group, has increased its stake in the Company from 45.07 per cent to 74.92 per cent, by acquiring IFFCO's shareholding in the Company and also from public through an Open Offer under SEBI Takeover Code.

About the Murugappa Group
Headquartered in Chennai, the Rs.7300 plus crore Murugappa Group is India's leading business conglomerate, which fosters an environment of professionalism for its strong workforce of 28,000 employees. The group has 29 registered companies, which are market leaders in diverse areas of business viz. engineering, abrasives, finance, general insurance, sanitaryware, cycles, sugar, farm inputs, fertilizers, plantations, bio products and nutraceuticals. The Group has manufacturing units in 12 states.

The Group has forged strong joint venture alliances with leading international companies like Roca, Cargill, Cerdak, DBS Bank, Mitsui Sumitomo and Groupe Chimique Tunisien and has consolidated its status as one of the fastest growing diversified business house in India.