Bharat Forge (500493) Q4 98/99 earnings summary

Executive summary

• 1998-99 was marked by weak industrial and automotive demand; turnover fell to Rs.4,685m from Rs.5,970m, while net profit rose to Rs.373.2m from Rs.362.1m.

• Cost control, export contracts, machining capabilities and debt reduction supported resilience and positioned operations for recovery.

Financial highlights

• Turnover Rs.4,685m vs Rs.5,970m; profit before extraordinary item and tax Rs.418.2m vs Rs.523.4m.

• Net profit Rs.373.2m vs Rs.362.1m, after a Rs.102.6m extraordinary exchange loss on 1% Foreign Currency Convertible Notes.

• Exports declined 17% to Rs.743m from Rs.895m amid global recessionary trends.

• Cost savings totaled Rs.79.1m; PBDIT-to-sales margin increased to 24.71% from 24.1%.

Outlook and guidance

• Exports targeted to exceed Rs.1,000m in 1999-2000; new contracts and machined front axle beams and steering knuckles expected to lift export value.

• Automotive industry volumes were expected to improve somewhat in 1999-2000; new business supplies were expected to add business from January 2000.

• Debt portfolio targeted at ~Rs.3,000m over the next two years, from Rs.3,957m at year-end.

• Y2K readiness targeted by September 30, 1999, with estimated expenditure of Rs.6m and contingency planning for external supplier risks.