Hindustan Copper (513599) Q4 02/03 earnings summary

Executive summary

• FY 2002-03 turnover was Rs 505.68 crore and net loss was Rs 147.70 crore, improved from Rs 184.04 crore loss in FY 2001-02.

• Copper sales fell to 37,187 tonnes from 45,501 tonnes; production missed targets for key products, though Malanjkhand recorded its highest-ever ore production and milling.

• Turnaround efforts centered on closing uneconomic operations, reducing costs and manpower, and pursuing the planned government disinvestment.

Financial highlights

• Turnover was Rs 505.68 crore versus Rs 604.98 crore in FY 2001-02; net loss narrowed to Rs 147.70 crore from Rs 184.04 crore.

• Loss before depreciation, provisions, write-offs/write-backs and interest was Rs 53.61 crore, versus Rs 75.31 crore in FY 2001-02.

• Cash loss was Rs 113.18 crore, compared with Rs 142.74 crore in FY 2001-02.

• VRS separation costs were Rs 136.68 crore for 1,570 employees; government grant-in-aid received for VRS was Rs 220 crore.

Outlook and guidance

• Target was to eliminate operating losses first and reach cash break-even in the near future.

• Cost actions included improving operational efficiency, further manpower reduction, transferring Rakha and Mosaboni townships to Jharkhand, selling the Kolkata corporate office, and lowering interest costs.

• Government planned to disinvest its 98.95% holding to a strategic buyer; due diligence by two interested parties was complete and financial bids were expected.

• Expansion and technology upgrade of the Khetri smelter were dropped, with expansion left to the prospective new management.