DCM Shriram (DCMSHRIRAM) Q4 04/05 earnings summary

Executive summary

• FY2005 consolidated net sales reached Rs. 1,868.91 crore; net profit was Rs. 104.73 crore, up from Rs. 73.40 crore, with EPS of Rs. 62.64.

• Growth was led by chemicals, plastics and sugar; expansion across integrated energy-intensive and agricultural businesses supported the strategy to improve current returns and develop new growth drivers.

Financial highlights

• Consolidated gross sales were Rs. 1,977.35 crore versus Rs. 1,556.62 crore; net sales were Rs. 1,868.91 crore versus Rs. 1,463.40 crore.

• Consolidated profit before depreciation, exceptional items, interest and tax was Rs. 235.33 crore; operating profit before exceptional items and tax was Rs. 200.62 crore.

• Consolidated PBT was Rs. 114.76 crore after Rs. 28.59 crore of exceptional items; net profit after minority interest was Rs. 104.73 crore versus Rs. 73.40 crore.

• Standalone directors’ report cited PBT excluding exceptional items of Rs. 138.53 crore, up over 34% YoY; standalone PAT was Rs. 104.43 crore.

Outlook and guidance

• Most capacity programs were expected to finish by H2 FY2006; plans included PVC capacity rising from 115 to 175 TPD, chlor-alkali from 200 to 250 TPD and captive power from 85 to 125 MW.

• Sugar crushing capacity was being expanded from 11,000 to 14,000 TCD, with completion targeted by October 2005; Hariyali Kisaan Bazaar was planned to grow from 16 to ~30 stores in FY2006.

• Urea feedstock conversion to dual gas/naphtha use was planned for completion by mid-FY2007 at a cost of Rs. 36 crore, subject to gas supply arrangements.

• Outlook anticipated firm sugar and PVC prices and continued demand growth for chemicals; higher input costs, duties and fertilizer policy uncertainty could constrain margins.