Welspun Living (WELSPUNLIV) Q4 98/99 earnings summary

Executive summary

• 18-month period ended 30 Sep 1999: sales and services Rs. 32,492.06 lacs; loss after tax Rs. 3,151.46 lacs, versus Rs. 774.50 lacs profit in the prior 12 months; periods are not comparable.

• Profitability was pressured by global recession, export disruption, weak yarn prices, costly cotton, high finance costs and underused expansion capacity; management expected improvement as markets recovered.

Financial highlights

• Gross profit before interest and depreciation was Rs. 5,523.05 lacs, versus Rs. 4,737.40 lacs in the prior 12 months; reported finance expenses were Rs. 6,173.14 lacs.

• Total expenditure was Rs. 36,338.34 lacs; loss before tax and loss after tax were each Rs. 3,151.46 lacs, with no tax provision for the period.

• Cash and bank balances rose to Rs. 2,044.11 lacs from Rs. 1,392.92 lacs; net current assets were Rs. 10,911.08 lacs.

Outlook and guidance

• Direct marketing in major markets, entry into the U.S., Israel and South America, and domestic terry towel development were intended to improve market access, capacity use and profitability.

• Management anticipated performance improvement as U.S. sanctions were withdrawn and Far East markets normalized; expansion capacity was expected to support growth.

• Strategic priorities included product innovation, R&D, operating-cost reduction, systems improvement, human-resource development and brand building.