SRF (SRF) Q4 02/03 earnings summary

Executive summary

• FY2002-03 net sales rose 17.8% to Rs.720.90 crore; PBT increased 48.3% to Rs.54.95 crore and PAT grew 16.9% to Rs.31.89 crore.

• Growth and profitability improved despite import pressure, lower NTCF conversion margins, higher chlorine costs and ongoing CFC phase-out; growth investments targeted new product markets.

Financial highlights

• Gross sales increased 18.0% to Rs.879.10 crore; PBIDT rose 5.1% to Rs.145.25 crore, while interest and finance charges fell 22.8% to Rs.42.22 crore.

• Net sales reached Rs.720.90 crore versus Rs.612.11 crore; PBT was Rs.54.95 crore versus Rs.37.04 crore, and PAT was Rs.31.89 crore versus Rs.27.28 crore.

• A Rs.19.31 crore deferred-tax charge contributed to total taxation provision of Rs.23.06 crore.

• Operating cash flow was Rs.112.05 crore and free cash flow Rs.92.41 crore, up from Rs.76.04 crore and Rs.41.37 crore, respectively, in FY2001-02.

Outlook and guidance

• Growth plans included Rs.230 crore of committed investment; a Rs.160 crore polyester films project was planned for commissioning by September 2004, and Rs.20 crore speciality chemicals facilities by January 2004.

• A Rs.50 crore HFC-32 project, with flexibility to produce HFC-134a, was approved and targeted for commissioning by early 2005.

• Management expected new growth drivers to support secular growth within about two years; BPO investment remained conditional on proving the pilot model over 12–18 months.

• FY2003-04 coated-fabrics pricing was expected to decline amid imports, with stabilization expected in the latter part of the year; polyester and PVC input prices could rise in H2.