Escorts Kubota (ESCORTS) Q4 96/97 earnings summary

Executive summary

• FY96/97 profitability improved as total income reached Rs.1,657.49 crore and profit after tax rose to Rs.127.22 crore from Rs.100.38 crore; asset divestments contributed significant one-time gains.

• Restructuring shifted strategic emphasis toward agricultural machinery, while two-wheeler and piston operations moved to joint ventures or associated entities; investments and technology partnerships supported expansion.

Financial highlights

• Total income Rs.1,657.49 crore vs Rs.1,444.21 crore; sales Rs.1,500.20 crore vs Rs.1,303.88 crore.

• Profit before tax Rs.167.22 crore vs Rs.138.88 crore; profit after tax Rs.127.22 crore vs Rs.100.38 crore.

• Adjusted for extraordinary items, income from extraordinary items was Rs.81.86 crore, mainly asset-sale surplus of Rs.85.31 crore less a Rs.3.45 crore compounding fee.

• Proposed dividend Rs.4.50/share on enlarged capital, up from Rs.4.00; total distribution including dividend tax Rs.30.55 crore.

• Shareholders’ funds rose to Rs.796.68 crore from Rs.705.61 crore; reserves and surplus reached Rs.731.52 crore.

Outlook and guidance

• Tractor sales target 51,000 units in FY97/98; current domestic and export demand could support exports of 15,000 tractors annually over the next 3–4 years.

• New Pune tractor plant planned at Rs.175 crore, with annual capacity of 15,000 units; combined Faridabad and Pune capacity expected near 80,000 tractors.

• Strategic ambition: Rs.10,000 crore income by 2000; agricultural machinery business targeted to exceed Rs.3,000 crore, while two-wheeler venture targeted Rs.2,000 crore turnover by 2000.

• Cellular subscriber base of 11,500 at March-end targeted to reach 60,000 by FY97/98-end; commercial operations expected in FY97/98 after network quality improvements.

• Escorts Finance targeted fixed-deposit mobilisation above Rs.300 crore in the current year; railway products targeted to exceed Rs.100 crore by 2000.