SRF (SRF) Q4 97/98 earnings summary

Executive summary

• FY97-98 sales were Rs 675.81 crore; PBIDT fell 5.9% to Rs 166.91 crore, while PBT declined to Rs 3.77 crore from Rs 15.81 crore amid weak demand, import pressure and higher costs.

• Financial restructuring, cost cuts and working-capital reduction were completed or advanced; the full benefit of lower interest costs and longer debt tenure was expected from FY98-99.

Financial highlights

• Gross sales were Rs 675.81 crore versus Rs 687.29 crore; PBIDT was Rs 166.91 crore versus Rs 177.56 crore, a reported decline of 5.9%.

• PBT was Rs 3.77 crore versus Rs 15.81 crore; profit after tax was Rs 3.31 crore versus Rs 14.66 crore.

• Cost-reduction measures generated savings exceeding Rs 10 crore, partially offsetting inflation, input-cost increases and lower selling prices.

• Net cash from operating activities was Rs 59.34 crore, compared with net cash used of Rs 43.18 crore in FY96-97.

• Proposed distribution comprised preference dividends only; no equity dividend was proposed, citing cash-flow needs and the economic environment.

Outlook and guidance

• FY98-99 Indian GDP growth was expected at 5%, with domestic demand for industrial yarn, fabrics and refrigerants forecast to remain static.

• Priorities included further financial consolidation, cost and current-asset reduction, quality and service improvements, TQM, and stronger customer relationships.

• International market development for industrial fabrics, refrigerant gases and polyester films, plus chloromethanes expansion and strategic alliances, were targeted for growth.

• Lower interest costs and longer debt tenure from restructuring were expected to lift profits from FY98-99 onward.