Asahi India Glass: floods, energy costs hit results for 2005-06

Asahi India Glass reported flat net sales for fiscal year 2005/2006 (FY 05/06) of INR 5.876 billion, while operating profit fell 1.8% year-on-year to INR 1.192 billion. The company was adversely affec…

Asahi India Glass reported flat net sales for fiscal year 2005/2006 (FY 05/06) of INR 5.876 billion, while operating profit fell 1.8% year-on-year to INR 1.192 billion. The company was adversely affected by floods in Mumbai at its Taloja floatglass plant, which resulted in floatglass segment sales falling 18.4% in FY 05/06. Segment sales of automotive glass improved by 12.63%. The company also came under pressure from rising input costs such as oil, glass and other raw materials such as soda ash, which hurt profitability. Operating profit margin fell 34 basis points to 20.3% for the year as adjusted raw material costs, as a percentage of sales, rose from 30.95% in FY 05/06 to 31.22% in 2005. Though the company commands a high market share in segments such as automotive glass, it did face pricing pressure in some segments on account of competition. As a result, even in the 4Q FY 05/06, floatglass segment sales declined 27%. The improvement in operating margin in 4Q FY 05/06 by 15 basis points to 20.79% suggests an improvement in the situation. The company is optimistic about its integrated glass plant at Rourkee, which should become operational by the end of 2006. The company expects its AIS glass solutions division, which provides architectural glass such as toughened glass, laminated glass and insulated glass for sun, heat and sound control, to do better in FY 07. It is also looking at raising exports, which are negligible at present.