Vardhman Textiles (502986) Q4 08/09 earnings summary

Executive summary

• FY09 turnover rose 6.35% to ₹2,495.38 crore; operating pressure sharply reduced continuing-operations PAT to ₹27.35 crore, while a ₹113.42 crore after-tax gain on discontinued operations lifted total net profit to ₹140.77 crore.

• Severe global recession, excess textile capacity and higher cotton costs squeezed industry margins; management prioritized productivity, cost control and utilization of new plants.

Financial highlights

• Turnover increased to ₹2,495.38 crore from ₹2,346.36 crore; exports rose 39.18% to ₹627.04 crore.

• PBDIT was ₹371.37 crore versus ₹377.54 crore; interest rose to ₹102.34 crore from ₹54.00 crore and depreciation to ₹207.32 crore from ₹154.56 crore.

• PBT fell to ₹61.71 crore from ₹168.98 crore; continuing-operations PAT was ₹27.35 crore versus ₹122.54 crore, and net profit including discontinued-operation proceeds was ₹140.77 crore.

• Basic EPS was ₹24.37 and diluted EPS ₹18.48; dividend recommended was ₹2 per share, versus ₹4 in FY08.

• Consolidated net sales were ₹2,965.42 crore versus ₹2,387.74 crore; consolidated PAT after minority interest was ₹191.70 crore versus ₹138.06 crore.

Outlook and guidance

• FY10 exports were expected to reach ₹700 crore; management aimed for full utilization of the Satlapur yarn and Budhni fabric capacities toward year-end.

• Final Satlapur expansion was to raise spindle capacity from 1.71 lakh to 2.33 lakh; Budhni fabric capacity was installed and ramping up utilization.

• Cost rationalization, efficiency gains, product diversification and customer focus were identified as responses to the downturn.