Balrampur Chini Mills (BALRAMCHIN) Q4 98/99 earnings summary

Executive summary

• Challenging year marked by floods, lower sugar prices and imports; net profit held nearly flat at Rs 4,304.38 lacs.

• Premium quality, institutional sales and cost controls supported realizations and profitability despite difficult market conditions.

Financial highlights

• Sales Rs 29,722.54 lacs vs Rs 32,215.04 lacs in 1997-98; operating profit before interest, depreciation and tax Rs 8,452.80 lacs vs Rs 8,729.54 lacs.

• Net profit Rs 4,304.38 lacs vs Rs 4,296.13 lacs; EPS Rs 22.94 vs Rs 22.90.

• Interest and financial charges fell to Rs 2,476.54 lacs from Rs 2,866.48 lacs, partly due to debt swaps and lower-cost funding.

• Dividend recommended at Rs 5.50 per share, up from Rs 5.00, despite nearly flat profits.

Outlook and guidance

• Substantial improvement in cane crushing and recovery expected in the ensuing season; expansion and Tulsipur merger expected to contribute in coming years.

• Capacity expected to rise from 15,500 to 20,500 TCD after the proposed Tulsipur merger; merger proposed effective 1 April 1999, subject to approvals.

• Higher 1999-2000 crushing is expected to help offset the higher cost of closing stock arising from low recovery and lower crushing in 1998-99.

• Growth strategy centers on sugar and allied products, organic expansion and selective acquisitions within conservative value-delivery guidelines.