Ambika Cotton Mills (AMBIKCO) Q4 08/09 earnings summary

Executive summary

• FY09 total income rose 13.64% YoY to Rs. 18,541 lakh, while gross profit fell 5.08% and PAT declined to Rs. 942.24 lakh from Rs. 1,323.74 lakh. Power cuts and higher lending rates constrained performance.

• Completed a 43,200-spindle compact spinning expansion and added 1.6 MW of captive wind capacity; spinning capacity reached 109,872 spindles.

Financial highlights

• Sales and other income were Rs. 18,540.73 lakh, versus Rs. 16,315.83 lakh in FY08; net sales increased 14.13% YoY.

• PBT was Rs. 1,315.92 lakh, down from Rs. 1,904.11 lakh; PAT was Rs. 942.24 lakh, versus Rs. 1,323.74 lakh.

• Gross profit was Rs. 3,121.93 lakh, versus Rs. 3,289.32 lakh; direct exports rose 12.21% to Rs. 7,506 lakh.

• Basic EPS was Rs. 16.04, down from Rs. 22.53; proposed dividend remained 20%, with Rs. 117.50 lakh dividend and Rs. 19.97 lakh dividend tax.

Outlook and guidance

• Management expected the expanded production base and strong market position to support growth and help meet industry challenges.

• Textile demand recession and Tamil Nadu power shortages persisted, with plants described as running at around 60% capacity; no improvement was seen.

• Opportunities cited included entry barriers from recession and high funding costs, plus demand for quality yarn made from Pima and Egyptian cotton.