DCM Shriram (DCMSHRIRAM) Q4 97/98 earnings summary

Executive summary

• FY98 revenue rose to Rs 70,546 lacs from Rs 62,554.68 lacs; profit after tax was Rs 2,397.51 lacs, versus Rs 4,881.37 lacs in FY97, which included a Rs 2,555.95 lacs asset-sale gain.

• Cost-control, overhead-reduction and energy-saving initiatives helped mitigate the impact of widespread economic recession and depressed product markets.

• Sugar production began at Ghaghara Sugar, while SAP R/3 implementation and a customer-focused organisational transformation advanced.

Financial highlights

• Sales of products were Rs 69,763.45 lacs; other income was Rs 782.55 lacs, bringing total income to Rs 70,546.00 lacs, up from Rs 62,554.68 lacs in FY97.

• Profit before exceptional items and tax was Rs 2,673.26 lacs; a Rs 275.75 lacs foreign-exchange loss reduced profit before tax and after tax to Rs 2,397.51 lacs.

• Depreciation and miscellaneous expenditure written off was Rs 2,762.14 lacs; net interest expense was Rs 4,606.21 lacs.

• Equity dividend recommended for the full year was 40%; proposed preference dividends were 13.5% and 12% for the specified share classes and periods.

Outlook and guidance

• Full SAP R/3 implementation was expected to improve business processes, management control, productivity and profitability; phase two remained under implementation.

• Ghaghara Sugar reported ~30% higher cane sowing in its command area for the current year, supporting expectations of greater cane availability next crushing season.

• Power-sector opportunities were being pursued; Kota power plants averaged plant load factors above 90%, and grid connectivity was being pursued for sugar-unit power exports.

• Export-market outreach targeted Sri Lanka, the Middle East, African markets and the Far East, with plans to increase overseas sales.