VST Industries (509966) Q4 96/97 earnings summary

Executive summary

• FY1996-97 PAT fell to Rs 7.56 crore from Rs 22.59 crore, amid sharp state-tax increases, excise revisions and weakness in financial services.

• Cigarette volumes declined 10.7% and market share fell from 16% to 13.2%; leaf tobacco and natural-products exports expanded.

Financial highlights

• Sales plus other income totaled Rs 57,681.47 lakh, versus Rs 62,055.65 lakh in FY1995-96; PAT was Rs 755.60 lakh versus Rs 2,259.32 lakh.

• Profit before tax was Rs 882.50 lakh versus Rs 3,129.36 lakh; interest expense, net of interest received, was Rs 825.54 lakh versus Rs 1,182.04 lakh.

• State taxation rose to Rs 25.04 crore from Rs 13.35 crore, adding pressure to cigarette volumes and profits.

Outlook and guidance

• FY1997-98 priorities: rebuild cigarette market presence, strengthen finances through fresh capital, support agri-diversification and reduce interest costs and debt burden.

• Management expected a significant increase in natural-products exports as the processing plant became fully operational; oleoresin commissioning delays had reduced anticipated exports.

• Management expected productivity benefits from workforce reductions under a new long-term union agreement to emerge in FY1997-98.