’s (NFCL) Q4FY11 net sales grew by 51.3% to Rs7.8bn on the back of higher trading volume (~7x YoY). Consequently OPM contracted by 603bps to 15.3%. Lower depreciation (-29.5% YoY) and interest cost (-20.8% YoY) resulted in net profit to surge by 23.6% to Rs285mn (PINCe Rs296mn).

Investment in NOCL: Nagarjuna Fertiliser holds 51% stake in Nagarjuna Oil Corporation Limited. This is a 6mn MT p. a. refinery coming up at Cuddalore, Tamil Nadu and is expected to be commissioned by FY13. Total capex for this project is Rs70bn. This business will be de-merged from NFCL as a separate entity.

Clarity awaited on Amalgamation and de-merger:

NFCL is de-merging its oil business (NOCL) under Nagarjuna Oil Refinery Ltd. and merging the remaining fertiliser business of NFCL and IKisan Ltd into Kakinada Fertilizers Limited (KFL).

Swap ratio declared by the company has resulted in number of shares increasing from 465.4mn (currently in NFCL) to 598.1mn (in merged KFL).

Promoters share holding to increase from 38.28% currently to 1.4% in the merged entity.

Due to unavailability of financial statements for IKisan Ltd and KFL exact impact of restructuring can not be calculated. Data pertaining to these companies are awaited from the management till then we keep the company under-review.