VST Industries (509966) Q4 98/99 earnings summary

Executive summary

• FY ended 31 Mar 1999: cigarette and tobacco sales turnover rose 9% YoY to Rs.703.34 crore, but the year ended in an Rs.88.87 crore net loss after Rs.91.67 crore of extraordinary items.

• Refocused strategy on cigarettes, with cash released from financial-services and real-estate assets to rebuild the traditional business; no dividend recommended.

Financial highlights

• Sales turnover Rs.703.34 crore vs Rs.645.26 crore; profit before extraordinary items and tax Rs.2.85 crore vs Rs.7.27 crore, while core-business profit before extraordinary items was reported as Rs.2.79 crore.

• Net loss Rs.88.87 crore vs prior-year profit Rs.6.50 crore, including Rs.91.67 crore in extraordinary items; profit and loss balance after prior-year carry-forward was a debit Rs.67.23 crore.

• Interest expense reached Rs.22.33 crore; state taxes were Rs.42.10 crore vs Rs.37.65 crore, alongside higher excise duties in the lower cigarette segments.

• Leaf exports rose 43.5% to Rs.30.6 crore from Rs.21.32 crore, despite a 31% decline in national tobacco exports.

Outlook and guidance

• Expected improved performance in FY 1999-2000, supported by greater cigarette productivity, stronger regional delivery, brand investment and improved margins.

• Just-in-time tobacco delivery was expected to release Rs.36 crore for debt retirement; FY 1999-2000 working-capital needs were estimated at Rs.40 crore.

• Y2K-compliant application software was in place; 57% of hardware was compliant, with the remaining 43% targeted for completion by June 1999. Planned Y2K spending: Rs.32 lakh in FY 1999-2000.