Birla Corporation (500335) Q4 97/98 earnings summary

Executive summary

• FY 1997-98 income was Rs 986.85 crore, down 9% YoY, as the sale of Bally Jute Mills reduced turnover and cement price declines and cost inflation sharply weakened profitability.

• Net loss was Rs 51.12 crore; the proposed dividend was Re 1 per share, subject to required approvals and payable from General Reserve.

Financial highlights

• Turnover was Rs 972.04 crore versus Rs 1,047.06 crore YoY; total income was Rs 986.85 crore versus Rs 1,080.82 crore.

• Gross profit before interest was Rs 24.16 crore versus Rs 80.90 crore; interest expense was Rs 45.43 crore versus Rs 44.93 crore.

• Loss before tax was Rs 51.36 crore and net loss was Rs 51.12 crore, versus prior-year net profit of Rs 6.38 crore.

• Operating cash flow was Rs 41.51 crore; fixed-asset purchases and capitalized interest used Rs 55.05 crore in investing activities.

Outlook and guidance

• The Raebareli fly-ash cement grinding unit, with 3.60 lakh tonnes annual capacity and estimated cost of Rs 27 crore, was expected to commission in Nov/Dec 1998 and reach ~80% utilization by Mar 1999.

• Management expected infrastructure, housing and road investment to lift cement demand and capacity additions to abate; synthetic yarn outlook remained weak, with cost reduction central to margins.

• A 1.2 million-tonne cement plant at Satna received environmental clearance; environmental clearance follow-up continued for a 1.2 million-tonne Chittorgarh expansion.