Deepak Nitrite (DEEPAKNTR) Q4 96/97 earnings summary

Executive summary

• First loss in 25 years: loss carried to the balance sheet was Rs. 3,22,89,511 after retirement-benefit provision and depreciation write-back. No dividend recommended; prior-year dividend was 22%.

• Delayed projects, higher borrowing costs and intermittent pollution-related shutdowns curtailed turnover and profitability; all plants were operating at year-end.

Financial highlights

• Sales and other income were Rs. 1,29,44,77,233 versus Rs. 1,20,20,23,144; sales were Rs. 1,25,17,74,375 versus Rs. 1,16,51,33,347.

• Gross profit before interest, depreciation and tax was Rs. 16,69,32,731 versus Rs. 15,54,16,632; profit before tax was a loss of Rs. 2,18,32,286 versus profit of Rs. 1,44,29,979.

• Interest rose to Rs. 14,63,78,799 from Rs. 10,73,35,590; depreciation was Rs. 4,23,86,218 versus Rs. 3,36,51,063.

• Exports increased to Rs. 1,889 lacs from Rs. 1,469 lacs; FOB export value was Rs. 16,74,33,716 versus Rs. 12,50,95,980.

Outlook and guidance

• Focus for 1997-98: maximize capacity utilization, improve margins from new investments, expand exports and strategic alliances, strengthen working-capital management and release funds from non-core areas.

• Management expected sustained consolidation and profitable growth, barring unforeseen circumstances; Nitrite Division's improved production and margins were expected to continue, while Nitroaromatics plants were expected to run at full or enhanced capacity.

• Higher export growth was expected; Sahyadri Dyestuffs and Chemicals Division expected to maintain performance.