Max Financial Services (MFSL) Q4 96/97 earnings summary

Executive summary

• FY97 gross revenue Rs 1,150.63m; audited profit after tax Rs 82.98m, down from prior-year profit after tax of Rs 120.11m.

• Combined business volume across business units and joint ventures reached Rs 7,050m vs Rs 5,130m in FY96, despite the first annual decline in standalone profit.

• Strategy centers on customer focus, cost control, technology investment and concentrating pharma resources on bulk drug actives.

Financial highlights

• Gross revenue Rs 1,150.63m vs Rs 1,123.85m; profit before tax Rs 85.08m vs Rs 120.11m; profit after tax Rs 82.98m vs Rs 120.11m.

• Sales and other operating income Rs 1,061.59m vs Rs 1,098.78m; other income rose to Rs 72.07m from Rs 35.61m, including Rs 57.59m interest income.

• Manufacturing and other expenses Rs 916.39m vs Rs 886.85m; net interest expense Rs 88.09m vs Rs 67.21m.

• Recommended dividend 35%; proposed dividend Rs 31.95m; general reserve appropriation Rs 30m.

Outlook and guidance

• Max GB planned bulk-drug capacity expansion to reach or exceed the country’s largest penicillin-based bulk-drug producers; exports from the Nanjangud facility expected to rise substantially in FY98.

• Cellular network capacity expansion planned, with Rs 2,000m investment over the following months; Max Page aimed to build on its service reach and roaming capabilities.

• Specialty products strategy prioritizes higher-margin output over additional capacity; metalliser utilization expected to improve, and Max Foil acceptance and export opportunities were being pursued.

• FY98 turnover expected to be lower following the formulations business transfer; management expected the move to free resources for bulk actives growth.