Bharat Electronics (500049) Q4 97/98 earnings summary

Executive summary

• FY1997-98 delivered higher turnover, production, PBT and PAT despite US restrictions on vital component imports and government orders worth Rs.10,000 lakhs not materialising.

• Unit results improved broadly: Machilipatnam returned to profit, while Taloja remained loss-making and was under focused management attention.

Financial highlights

• Turnover rose 3% YoY to Rs.126,130 lakhs from Rs.122,624 lakhs; production value increased 2% to Rs.125,558 lakhs from Rs.123,045 lakhs.

• PBT was Rs.10,234 lakhs versus Rs.9,567 lakhs; PAT rose 4% to Rs.5,340 lakhs from Rs.5,119 lakhs.

• EPS increased to Rs.6.68 from Rs.6.40; interest expense fell to Rs.5,101 lakhs from Rs.6,579 lakhs, while depreciation rose to Rs.4,917 lakhs from Rs.4,246 lakhs.

• Sales less returns were Rs.124,589 lakhs and services income Rs.1,541 lakhs; prior-period adjustments were a net expense of Rs.599 lakhs versus net income of Rs.4,005 lakhs.

Outlook and guidance

• FY1998-99 MoU targets: turnover Rs.150,000 lakhs, gross margin Rs.20,000 lakhs and net profit to capital employed ratio of 6%.

• Year-end order book was Rs.155,500 lakhs, with an executable-order shortfall of Rs.40,000 lakhs against FY1998-99 sales targets; adequate orders were anticipated through customer negotiations.

• US import restrictions were expected to affect the coming year's performance; mitigation included alternative sourcing, design changes, indigenisation and a planned Singapore office.