Bajaj Electricals (500031) Q4 02/03 earnings summary

Executive summary

• Revenue from sales and other income rose 8% to Rs 450.12 crore, but the year ended with a loss before provisions of Rs 11.64 crore, driven by lower other income and intense competition.

• Strategic business units were reorganized as profit centres; the focus for FY03-04 is a return to profitability through cost reductions, margin improvement, value engineering and tighter working-capital management.

Financial highlights

• Sales and other income reached Rs 450.12 crore versus Rs 417.14 crore; other income declined to Rs 6.98 crore from Rs 14.40 crore.

• Loss before provisions was Rs 11.64 crore versus Rs 2.76 crore in FY01-02, excluding prior-year non-compete fees of Rs 3.25 crore and provisions.

• Net loss after tax was Rs 9.80 crore; a net deferred-tax credit of Rs 3.74 crore reduced the reported loss.

• Management’s profitability table reports sales of Rs 443.14 crore, PBT loss of Rs 11.64 crore and interest expense of Rs 18.07 crore; FY01-02 PBT was Rs 0.49 crore.

• Equity EPS was negative Rs 24.94 versus negative Rs 4.81 in FY01-02; no equity dividend was recommended, while Rs 1.10 crore preference dividend was paid.

Outlook and guidance

• FY03-04 is expected to be challenging, with management targeting a significant operational turnaround and improved profitability.

• Improved product quality and range, dealer networks, marketing and brand-building are expected to support growth; infrastructure spending may aid Luminaires and Engineering & Projects.

• A strong Ranjangaon order book was expected to support improvement, though profitability depends on better utilization, product mix and lower interest and depreciation burdens.

• Mission Excell initiatives target top-line growth, margin improvement and market-share gains, particularly in Fans and Appliances.