Vardhman Special Steels (VSSL) Q4 10/11 earnings summary

Executive summary

• First reporting period included the steel undertaking’s operations for 3 months, from 1 Jan to 31 Mar 2011, following a demerger effective 1 Jan 2011.

• The period recorded turnover of ₹124.55 crore and net profit after tax of ₹6.96 crore.

• Strategy centers on niche special and alloy steels, quality-led applications, facility upgrades, product development and a greater share of value-added products.

Financial highlights

• Turnover was ₹124.55 crore; net sales were ₹113.09 crore after excise duty, with other income of ₹0.26 crore.

• PBDIT was ₹12.72 crore; PBT ₹10.73 crore; PAT ₹6.96 crore after current tax of ₹3.85 crore and deferred tax credit of ₹0.09 crore.

• Depreciation was ₹0.95 crore and interest and financial charges ₹1.04 crore for the period.

• Inventory stood at ₹97.98 crore; net current assets were ₹176.34 crore at 31 Mar 2011.

• Operating cash flow was negative ₹7.73 crore; investing cash flow negative ₹22.17 crore and financing cash flow positive ₹30.81 crore.

Outlook and guidance

• Plans include upgrading facilities, improving quality and output, growing value-added products, strengthening R&D and expanding training and HR practices.

• Steel demand outlook cited growth in auto production and infrastructure; alloy and special steel demand was projected at 9.70 million MT by 2020 versus 3.40 million MT in 2009.

• Export development included customers in Thailand and market studies for the US and Turkey for 2011-12.