Welspun Living (WELSPUNLIV) Q4 03/04 earnings summary

Executive summary

• FY04 revenue rose 22% YoY to Rs. 36,674.33 lakh; PBT increased 90% to Rs. 4,463.11 lakh and PAT reached Rs. 3,002.91 lakh.

• Higher towel volumes and cost competitiveness supported profitability despite pressure on realizations and rising costs; no dividend was recommended as profits were retained for expansion.

• Growth plans target expanded home-textile capacity and wider product offerings, supported by the domestic SPACES brand and direct US marketing.

Financial highlights

• Sales and services were Rs. 36,674.33 lakh versus Rs. 30,101.66 lakh in FY03; reported growth was 22%.

• PBT was Rs. 4,463.11 lakh versus Rs. 2,348.98 lakh; PAT was Rs. 3,002.91 lakh versus Rs. 1,877.41 lakh.

• Consolidated sales and services were Rs. 37,391.79 lakh and consolidated PAT was Rs. 2,947.75 lakh in FY04.

• Net finance expenses declined to Rs. 2,342.08 lakh from Rs. 2,485.35 lakh, attributed mainly to softer interest rates and access to cheaper foreign-currency finance.

Outlook and guidance

• Anjar expansion was expected to be commissioned by December 2004; the stated project cost was Rs. 498.67 crore, financed by Rs. 110 crore equity, Rs. 325 crore debt and Rs. 63.67 crore internal accruals.

• Planned Anjar facilities include 11,800 tonnes/year each of towel production and spinning, 35 million metres/year of sheets, processing capacity for towels and fabric, and 18 MW captive power.

• FY05 Welspun USA turnover target was US$6 million; its FY04 turnover was US$4.46 million.

• A good US order book was reported for FY05; management expected quota abolition in 2005 to expand sourcing opportunities for Indian producers.