Blue Star (500067) Q4 97/98 earnings summary

Executive summary

• FY97-98 total income rose to Rs 452.77 crore from Rs 440.85 crore; profit after tax increased 5% to Rs 15.51 crore amid a second year of Indian economic slowdown.

• Export earnings increased 63% to Rs 35.19 crore; total foreign-exchange earnings rose 36% to Rs 47.03 crore.

• A proposal would separate the fast-growing International Software Division into listed Blue Star Infotech Limited (BSIL), with a 25% reduction in the existing paid-up equity capital.

Financial highlights

• Total income was Rs 452.77 crore versus Rs 440.85 crore; profit before tax was Rs 18.04 crore versus Rs 23.21 crore.

• Profit after tax was Rs 15.51 crore, up 5% from Rs 14.78 crore; proposed dividend remained Rs 3.50 per share, or 35%.

• Depreciation increased 86% to Rs 8.12 crore following fixed-asset additions of Rs 38.93 crore; tax provision fell to Rs 2.53 crore from Rs 8.43 crore.

• Internal funds generated, defined as PAT plus depreciation, increased to Rs 23.63 crore from Rs 19.14 crore.

Outlook and guidance

• BSIL projections called for revenue growth of ~50% per year and revenue above Rs 200 crore by 2002-03, with net profit reaching Rs 33 crore.

• Projected BSIL EPS was expected to rise from Rs 8 per share in 1999-2000 to Rs 33 in 2002-03; projections described this as a fourfold increase over three years.

• Estimated tax savings from BSIL were Rs 0.7 crore for six months of 1998-99, rising to Rs 8.5 crore by 2002-03.

• The software transfer was proposed effective October 1, 1998, with legal and listing procedures potentially extending to March 1999; timing depended on court clearance and shareholder approval.