DCM Shriram (DCMSHRIRAM) Q4 02/03 earnings summary

Executive summary

• FY03 profitability improved across major operations; standalone PAT rose to Rs.56.61 crore from Rs.17.01 crore, while consolidated PAT reached Rs.52.71 crore versus a loss of Rs.18.62 crore.

• Growth reflected productivity gains, cost control, efficiency improvements and better realizations; fertilizer policy changes also resolved a major source of uncertainty.

Financial highlights

• Standalone sales were Rs.1,152.85 crore, up from Rs.1,056.16 crore; operating profit rose to Rs.161.36 crore from Rs.114.95 crore, and PBT to Rs.75.21 crore from Rs.32.91 crore.

• Standalone interest was Rs.41.12 crore versus Rs.41.57 crore; depreciation and miscellaneous expenditure written off were Rs.45.03 crore versus Rs.40.47 crore.

• Consolidated revenue was Rs.1,391.63 crore versus Rs.1,190.25 crore; consolidated profit before tax was Rs.70.48 crore versus Rs.1.08 crore.

• Standalone basic/diluted EPS was Rs.33.81 versus Rs.10.08; consolidated basic/diluted EPS was Rs.31.48 versus a loss of Rs.11.19.

• Recommended equity dividend was 45% for FY03, inclusive of the 15% interim dividend already paid.

Outlook and guidance

• Fertilizer profitability was expected to hold under the new group concession policy; the operation was the lowest-cost producer in its pre-1992 naphtha-based group.

• PVC demand was forecast to grow ~6% in FY04; pipe demand was expected to rise 5–6%, supported by water-management and drip-irrigation initiatives.

• Chlor-alkali demand was expected to benefit from GDP and manufacturing recovery, while tariff reductions could increase exposure to low-priced imports.

• Hariyali Kisaan Bazaar was being tested through pilot stores; a wider rollout was conditional on pilot learnings and continued encouraging farmer response.

• LNG feedstock conversion for fertilizer operations was planned when LNG became available; value-added plastics and polymers remained targeted growth areas.