DCM Shriram (DCMSHRIRAM) Q4 96/97 earnings summary

Executive summary

• FY ended Mar. 31, 1997: sales Rs.620.91 crore; profit after tax Rs.48.81 crore, including a Rs.43.63 crore land-transfer gain and Rs.5.88 crore insurance claim income.

• Operations continued to face commodity-margin pressure and textile relocation costs; initiatives focused on cost control, energy efficiency, quality, and SAP R/3 implementation.

Financial highlights

• Sales Rs.620.91 crore and other income Rs.30.19 crore; profit before tax Rs.50.10 crore and profit after tax Rs.48.81 crore, versus Rs.41.79 crore PAT in FY96.

• Net interest expense rose to Rs.42.92 crore from Rs.17.99 crore; depreciation and miscellaneous write-offs were Rs.24.88 crore versus Rs.19.10 crore.

• Actual turnover, operating profit, and PAT were Rs.556.76 crore, Rs.117.90 crore, and Rs.48.81 crore, respectively, exceeding projections of Rs.464.37 crore, Rs.73.50 crore, and Rs.27.66 crore.

• Net cash from operations was Rs.69.00 crore; net cash used in investing and financing activities was Rs.45.65 crore and Rs.43.64 crore, respectively.

Outlook and guidance

• Sugar plant at Ajbapur was expected to be commissioned by October 1997; management separately anticipated the U.P. sugar project commissioning by November 1997, ahead of the crushing season.

• Higher production was expected at the stabilized Bharuch chlor-alkali plant, subject to market demand; export opportunities for caustic soda flakes were being explored.

• Limestone prospecting for a proposed Rajasthan cement project was progressing; opportunities to set up power plants for sale of power were being pursued.

• SAP R/3 implementation and further energy-saving initiatives were intended to improve efficiency, controls, and profitability.