Blue Star (500067) Q4 98/99 earnings summary

Executive summary

• FY1998-99 total income rose 5% to Rs. 476.49 crore; profit after tax increased to Rs. 16.27 crore despite a third year of slow economic growth and pricing pressure.

• Cost reduction lifted gross margin to 25.8% from 23.0%; operating profit rose over 21% to Rs. 38.37 crore.

Financial highlights

• Total income was Rs. 476.49 crore vs Rs. 452.77 crore; profit before tax was Rs. 18.12 crore vs Rs. 18.04 crore.

• Profit after tax was Rs. 16.27 crore vs Rs. 15.51 crore; EPS increased to Rs. 6.00 from Rs. 5.72.

• Gross margin improved to 25.8% from 23.0%, generating reported net savings of Rs. 12.90 crore through value engineering and procurement.

• Interest expense rose 77% to Rs. 9.86 crore as borrowings increased; employee expense growth was kept below 5%.

Outlook and guidance

• Latest York centrifugal and water-cooled screw chillers were expected to launch within weeks; Thane production targeted import-comparable quality at 10% lower customer cost.

• ERP rollout was planned across the core Airconditioning Projects Division over the next two to three years, with expected lower costs, faster execution and higher productivity.

• Management planned to expand contractor and dealer reach, contract manufacturing and energy-efficient product offerings.

• Software spin-off remained subject to High Court approval; completion and listing were being pursued, with the scheme retaining retrospective effect from Oct. 1, 1998.