Bharat Forge (500493) Q4 99/00 earnings summary

Executive summary

• FY1999-2000 delivered record results: total income rose 20.2% YoY to Rs.5,852.7 million; profit after tax before the exceptional charge increased 67.8% to Rs.626.2 million.

• Growth reflected higher manufacturing sales, export expansion, increased machining/value addition and operating efficiencies, while financial-asset restructuring reduced non-core exposure.

Financial highlights

• Manufacturing sales grew 23.6% YoY to Rs.5,677.2 million; exports rose 49% to Rs.1,108 million, or 19.5% of sales.

• PBT before extraordinary expenditure was Rs.727.6 million versus Rs.418.2 million; PAT before the extraordinary item was Rs.626.2 million versus Rs.373.2 million.

• A Rs.133.3 million extraordinary investment-sale loss reduced reported net profit to Rs.492.9 million; total expenditure was Rs.5,125.2 million.

• Raw-material costs fell to 32% of manufacturing sales from 36% YoY, aided by a shift toward higher-value products.

Outlook and guidance

• Export target for 2000-01 was Rs.1,500 million; directors also projected exports to grow 35% over FY00 on newly secured contracts.

• Sixty-three new high-value, high-volume products were expected to generate Rs.1,400 million in sales in 2000-01; expected cost savings were Rs.51 million.

• Management planned to raise machining value addition by a further 30% in 2000-01; industry expectations pointed to ~15% growth in heavy-vehicle volumes.

• SAP R/3 supply-chain integration was targeted for completion through 2000, with most of the supply chain due in ERP by August and the back-end system by November.