Rallis drops over 4 per cent post Q3FY19 results

Rallis India posted positive results for the quarter ended December 31, 2018. The company also announced a merger with Metahelix Life Sciences Limited (MLSL).

On a consolidated basis, the company reported revenues of Rs. 417 crore, posting a growth of 7 per cent. This growth is attributed to the steady performance in both the domestic and international markets. The performance on the domestic front was bolstered on account of the strengthened dealer network and revised incentive structure.

EBITDA stood at Rs. 28 crore in Q3FY19, resulting in margins of 7 per cent. The overall profitability and margins witnessed compression on account of higher input costs and imports from China. The company aspired to offset the impact of rising cost of raw materials by developing an improved product mix consisting of a sizeable chunk of value added/ specialty products.

PAT was reported at Rs. 14 crore and is expected to improve on the back of specific growth-oriented initiatives undertaken by the company. The company’s strategic initiatives to propel domestic growth include, adding distributors to its channel, revitalizing dealer incentive structure, expanding credit period, emphasizing on specialty product launches and improving the connect between distributors and top management. On the other hand, its initiatives to propel international growth include, investing in capacity expansion, registration in international markets and increasing higher margin exports to smaller South Asian countries.

The company's board approved the proposal for a merger between the company and its wholly-owned subsidiary, MLSL. The merger is subject to regulatory approvals. The merger does not involve any cash consideration and is synergistic as MLSL and Rallis are engaged in complementary businesses. Thus, creation of a combined business entity will enhance shareholder value and facilitate focused operational efforts. The resulting simplification of management structure will help rationalize costs, leading to improved administration and noteworthy cost savings.

On Friday, the shares of Rallis India experienced selling pressure. The stock opened at Rs. 168.10 per share and hit a high and low of Rs. 168.60 and Rs. 163.00, respectively. At 9:38 am, the stock was trading at Rs. 165.10, down 4.57 per cent.