• Q2 net sales Rs 2.45 bln; up 5% on year.
• Q2 PBIDT Rs 223.1 mln, down 36% on year.
• Non-core businesses’ H1 sales Rs 2.14 bln, up 30% on year
• Profit decline caused by losses on Chennai ship-berthing facility; margin pressure in trucking and TNEB coal handling contract; increased costs, slow growth in non-core businesses.
• Margin pressure to continue into Q3 from trucking, Chennai ship berth, TNEB contract
• Vice Chairman: Short-term underperformance must be seen in context of overhauling of organizational structure, business priorities.

Chennai, 26 October 2006: Sical Logistics Ltd, India’s leading provider of integrated multi-modal bulk logistics for bulk and containerized cargo, today announced that its unaudited net profit for the second quarter-year ended 30 September 2005 was Rs 61.2 million, down 64% from Rs 170.4 million in the same period a year ago.

Unaudited Q2 sales were Rs 2.45 billion, up 5% from Rs 2.34 billion a year ago, while Q2 profit before interest, depreciation, and taxes (PBIDT) was Rs 223.1 million, down 36% from Rs 349.6 million a year ago.

The fall in Q2 earnings and slow revenue growth was primarily on account of:

1. Nearly Rs 15 million in Q2 at Sical’s exclusive ship berthing facility (JD-5) at Chennai port on competitive pressure from deepend drafts at the Chennai port.
2. Nearly Rs 40 million loss in Q2 from Sical’s coal handling contract with the Tamil Nadu State Electricity Board (TNEB) as volumes and unit realizations dipped on TNEB’s inability to source higher capacity vessels and TNEB’s reduced dependence on coal for power generation because of increased hydel power generation.
3. Reduced volumes and margins in the trucking division owing to issues related to government guidelines on overloading and pricing pressure mainly from the unorganized trucking providers.
4. Higher costs in Sical’s non-core business of building materials: purchase of traded goods in Q2 rose by Rs 157.7 million to Rs 742.0 million.

H1 net sales of Sical’s logistics division, the company’s core business, was Rs 2.74 billion, down 10% from Rs 3.06 billion a year ago. H1 net sales of Sical’s non-core businesses, consisting of building materials, services, and manufacturing, was Rs 2.14 billion, up 30% from Rs 1.65 billion a year ago.

H1 profit before interest and tax (PBIT) of the logistics division was Rs 319.2 million, down 30% from Rs 456.7 million a year ago, while H1 PBIT of the non-core businesses was Rs 133.6 million, up 27% from Rs 105.6 million a year ago.

VICE CHAIRMAN ASHWIN MUTHIAH’S COMMENT

Sical Vice Chairman Ashwin Muthiah said that Sical’s Q2 results, while being disappointing in absolute terms, should be seen in the context of major changes in the company’s business and organizational structure.

“As Sical refocuses, reorganizes and overhauls, we might have to sometimes forgo short-term performance for long term gain,” he said. “For example, the offshore logistics business is turning out to be a major priority for us, as will be end-to-end structured multi-modal solutions based on product verticals,” Mr Muthiah added.

OUTLOOK

Even as the benefits of the business and financial restructuring are beginning to accrue to Sical, gains in Q3 and Q4 might be affected by the same adverse factors that affected Sical’s Q2 financials. Margins will continue to be squeezed in trucking, the ship berthing facility at Chennai, and the TNEB coal contract. Sical has plans for all of the above, but the plans will take a few months to take effect.

About Sical Logistics
Sical Logistics Ltd is India’s leading provider of integrated multi-modal logistics for bulk and containerized cargo-port logistics; inland logistics; container logistics; and offshore logistics. Sical's delivery network includes an exclusive walk-in berth at Chennai for ships carrying bulk cargo; a container terminal at Tuticorin, 1.9 million square feet of storage across over 100 warehouses; owned and regularly contracted fleet of over 2400 transport vehicles, and container freight stations at 4 locations across India. Sical's FY2005-06 revenue was Rs 9.60 billion on Rs 301.9 equity capital.

News media contact

Anuradha Altekar,Ubiquus
anuradha@ubiquus.biz
+91.9870100642

Notes

1. Previous period's figures have been regrouped wherever necessary.
2. Regarding statutory auditors comments on the audited accounts for the year ended
   31 March 2006 the management's replies are:
   
   (2.1) Comment: Investments in certain shares considered as long term investments stated at
   book value, whose market value is lower by Rs 3.71 crore.
   
   Reply: Investments in certain shares are strategic long term investments and the intrinsic
   value of the same is relevant as compared with its market value.
   
   (2.2) Comment: Advances under court cases and arbitration aggregating to
   Rs 25.45 crore are stated at book values.
   
   Reply: These pertain to cases under court and arbitration proceedings and are being closely
   followed up with legal counsel.
   
   (2.3) Comment: Dues by subsidiary aggregating to Rs 75.44 crore are stated at book values.
   
   Reply: The management is in the process of restructuring the subsidiary company to deal in estates
   and properties. Various amounts due from the subsidiary company will be either refunded
   By the subsidiary or restructured by way of (a) transfer of its investments to the holding company and
   (b) sale of other assets
3. Details of investors/shareholders complaints for the quarter ended 30 September 2006 are furnished below:
   

   No. of Complaints as of 01.07.2006	Complaints received during the quarter	Replied/Disposed off	Pending as at 30.09.2006
   Nil	7	7	Nil

4. Sical’s board of directors have decided to hive off Sical’s oil palm division and
   is in the process of obtaining the necessary approvals.
   Profit Before Tax of the Oil Palm Division for the half year is Rs 262 lakh
   (Rs 263 lakh for H1 2005-06)
   and the Income Tax is Rs 86 lakh (Rs 86 lakh - 2005-06 half year)
   
5. The above results together with a "Limited Review" by the Auditors of the Company,
   were taken on record by the Board of Directors at the meeting held on
   25 October 2006.