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Aditya Birla Nuvo reports excellent performance for Q4 FY2006

28th April, 2006

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4th Quarter
Full year
Consolidated Net Sales Rs. 1674.20 crore 68% Rs. 4759.36 crore49%
Consolidated Net Profit Rs. 66.17 crore 89% Rs. 190.67 crore225%

Particulars
Consolidated
Standalone
 
Quarter ended
31 March
Year ended
31 March
Quarter ended 31 March
Year ended
31 March
 
2006
2005
2006
2005
2006
2005
2006
2005
Net income from operations
1,674.20
995.81
4,759.36
3,189.11
752.01
484.17
2,610.40
1,860.84
Operating profit
185.40
80.16
573.39
261.35
123.30
69.84
413.46
264.15
Profit before tax
81.96
35.39
264.38
94.14
76.15
44.04
262.15
164.73
Exceptional items
(0.97)
(0.89)
(4.04)
(7.65)
(0.97)
(0.89)
(4.04)
(7.65)
Provision for taxation
22.81
3.84
85.92
43.77
20.95
3.62
81.19
43.36
Net profit (after minority interest)
66.17
35.04
190.67
58.72
54.22
39.53
176.92
113.72
EPS (Rs.)
8.58
5.76
27.07
8.78
7.24
6.60
25.77
18.98

Aditya Birla Nuvo has posted excellent results for the year ended 31 March 2006.
Its consolidated turnover of Rs. 4759.36 crore is up by 49.2 per cent over Rs. 3189.11 crore achieved in the previous year, also placing the company in the billion dollar league. Net profit has leapfrogged to Rs. 190.67 crore against Rs. 58.72 crore in the previous year.

Revenue from its subsidiaries and associates rose from Rs. 1328.26 crore to Rs. 2148.95 crore. Their performance has been impressive, with Nuvo's share in profit of JVs and subsidiaries jumping from negative Rs. 55.00 crore to positive Rs. 13.74 crore, mainly driven by the BPO and the telecom businesses. During the year, the company increased its stake in Idea Cellular from 4.3 per cent to 20.7 per cent.

The company's stand-alone turnover at Rs. 2610.40 crore, grew by 40.3 per cent vis-a-vis Rs.1860.84 crore attained in the previous year. This is inclusive of Rs.368.98 crore reached by its fertilisers business, incorporating the period from September to March. The company's stand-alone operating profit, also reflecting the fertiliser business' profit of Rs.75.95 crore, is up by 56.5 per cent at Rs. 413.46 crore. Stand-alone net profit is higher at Rs. 176.92 crore against Rs. 113.72 crore, despite a major rise in interest on borrowings to fund the acquisition of the 16.5 per cent additional stake in Idea Cellular.

Dividend
The Board of Directors has recommended a dividend of 50 per cent for the current year as against 40 per cent last year. The company will also pay a dividend tax of 14.025 per cent. The dividend outgo will therefore be Rs.42.71 crore.

Standalone performance
Particulars
Sales volume
Net sales (Rs. crore)
Unit
Yearended
31 March
Yearended
31 March
2006
2005
2006
2005
Garments Lakh pcs
111.0
83.3
620.55
472.63
Viscose filament yarn Tonnes
17,380
16,444
385.55
352.00
Carbon black Tonnes
175,944
165,095
564.23
467.25
Textiles
-
-
524.80
456.12

Madura Garments
Several new stores augmented Madura Garments' salient retail presence, currently at 3.1 lacs sq ft. To give the customer an international retail experience, the division is aggressively expanding large format exclusive brand outlets, along with selected stores. The Esprit brand, which it launched recently in India, has met with an encouraging response.
Louis Philippe, Van Huesen and Allen Solly - its fashion brands and Peter England - its popular brand, consolidated their market share, registering strong profitable growth. Innovative merchandise and creative campaigns have resulted in an upsurge in brand equity, further entrenching its leadership status.

Madura Garments' revenue has thus soared by 31.3 per cent to Rs.620.55 crore vis-a-vis Rs.472.63 crore recorded in the previous year. Strong growth across its product range particularly in shirts, trousers and suits boosted revenue growth. Operating profit is up by 46.9 per cent.

The thrust on contract exports towards providing full service is paying off. To give a fillip to Madura Garments' contract exports business, a capex of Rs.46 crore has been planned to increase capacity, strengthening design and product development.

Rayon division
The Rayon division recorded its highest ever volumes at 17,380 tonnes, higher by 5.7 per cent over the previous year. Aided by strong volume growth, revenues increased by 9.5 per cent to Rs. 385.55 crore as against Rs. 352.00 crore in the previous year. VFY realisation is marginally lower than previous year, though it improved in the later part of the year. With the levy of anti-dumping duty against Chinese imports, realisation is expected to improve.

In the chlor-alkali segment, the expanded caustic soda capacity has been fully utilised, leading to enhanced revenues. However, ECU realisation remained volatile, and is marginally lower than the previous year. The division's operating profit is flat at Rs. 89.71 crore (Rs. 87.62 crore) despite high input prices and maintenance cost. The 20 MW captive power plant and 65 TPD caustic soda expansion is on track.

Carbon Black division
The Carbon Black division has shown a robust performance. Total volumes grew by 6.6 per cent at 175,944 tons, the highest ever recorded in a year, on the back of a vibrant auto sector. Realisation is up by 13.3 per cent supported by a change in market and segment mix and the partial passing on of the high CBFS prices to its customers. Revenues at Rs. 564.23 crore grew by 20.8 per cent vis-a-vis Rs. 467.25 crore attained in the previous year. Operating profits are higher by 19.7 per cent at Rs. 92.37 crore. While the company is pursuing environmental clearance for 55,000 TPA brown-field expansion, the division is also exploring possibilities to set up a green-field project of 60,000 TPA in western India.

Textiles division
The textiles division's revenues have gone up 15.1 per cent to Rs. 524.80 crore as against Rs.456.12 crore in the preceding year. Operating profits jumped by 69.9 per cent buoyed by a strong performance across segments. Its linen fabric segment continued on its expansive growth trajectory gaining from higher volumes and better realisations. Value-added products and enhanced volumes spurred the performance of the worsted segment while the synthetic yarn segment was impaired due to a demand-supply mismatch.

Fertilisers division
Increased operational efficiencies coupled with rising demand for urea fertiliser aided the fertiliser division's production and sales reaching higher levels at 5.76 lacs MT and 5.64 lacs MT respectively for the period from 1 September 2005 to 31 March 2006, representing 115 per cent of re-assessed capacity. The net turnover stood at Rs. 368.98 crore for the seven months ending 31 March 2006, while operating profits have been impressive at Rs. 75.95 crore.

Insulators domestic marketing
A strong demand in the transmission and distribution segment led to a 20.4 per cent volume growth in the insulators business. Revenue at Rs. 135.89 crore reflect a 35.7 per cent rise stemming from higher volumes and better realisation.

BIRLA NGK Insulators Private Limited, the 50:50 JV with NGK, has posted a turnover of Rs. 226.60 crore, a growth of 34.2 per cent. Led by NGK experts, yield improvement efforts are being pursued. The JV has substantially curtailed its losses from Rs.25.33 crore in the previous year to Rs.3.62 crore in the current year.

Other joint ventures and subsidiaries
At Birla Sun Life Insurance, the total premium income has grown by 36.7 per cent to Rs.1237.84 crore. The Individual new business annualised premium advanced by 16 per cent at Rs.711.11 crore. The Group business was impacted by the intense pricing pressure from competitors. The company has multiplied its branches; today it has 85 branches as against 44 in the preceding year. The company is focusing on expanding its branch network by adding another 31 in the ensuing year, while ramping up the agency force considerably. It has an agency force of 18,000.

At TransWorks, revenues have risen significantly by 50.9 per cent to Rs.163.30 crore vis-a-vis Rs.108.23 crore in the previous year. While four new major clients were added, business from existing clients was ramped up. The company has also been able to improve its business mix with a growing share of outbound and non-voice business. Further, the company increased its seat capacity to 2,235 (1656) and strengthened its employee base to 4100 for catering to its fast-growing business. The company is optimising its infrastructure utilisation leading to improved margins, and has wiped off all carried forward losses.

At PSI Data Systems, the business has turned into the black with positive net profits on improved margins. Revenues stood at Rs.85.79 crore. Gross margins improved from 36 to 39 per cent through an increased share of high margin offshore business and improved manpower utilisation. The company has added 11 clients while focusing on core verticals namely Corporate Banking, High Tech and Testing.

Idea Cellular's subscriber base grew by 45.3 per cent to 7.37 million. Revenues for the year showed an impressive jump of 31.1 per cent at Rs.2965.78 crore. The company has an 8.2 per cent market share in the total mobility segment. It enjoys a predominant position in Maharastra, Gujarat, Andhra Pradesh, Kerala, Madhya Pradesh, Delhi, U.P. (E) and Haryana and is planning to roll out in three new circles, increasing its presence in 11 circles.

Strategic highlights
The company has merged Indo Gulf Fertilisers with Aditya Birla Nuvo, effective from
1 September 2005. Its accounts include the seven months financials of Indo Gulf Fertilisers.

Status of consolidation of Birla Global Finance with Aditya Birla Nuvo
The company is taking necessary steps to complete the corporate restructuring to merge Birla Global Finance with Aditya Birla Nuvo. The scheme of amalgamation between Birla Global Finance and Aditya Birla Nuvo has been sanctioned by the Hon'ble High Court, Mumbai on 27 January 2006. However, the sanction from the High Court of Gujarat is pending.

Going forward
Overall, the outlook for Aditya Birla Nuvo is optimistic given its strategic thrust, growth and capex initiatives taken in each of the businesses.

  • Madura Garments' thrust will continue on retail expansion, merchandise management, sell-thrus and optimising cost. In export manufacturing, strengthening manufacturing, design and product development is on the cards
  • VFY's focus is on improving quality. To offset the declining ECU realisation, endeavours to improve productivity and reduce costs are ongoing.
  • Carbon Black will push volumes in domestic market and pass on the increased CBFS cost to its customers.
  • Fertilisers will focus on increasing share of value-added products while maximising volumes through higher operational efficiency, increased on-stream days and de-bottlenecking to increase capacity
  • Textiles will gain from the focus on value added-yarns and the retail reach of linen Fabrics.
  • The insulator JV will continue its emphasis on higher value products and yield improvement
  • Birla Sun Life Insurance's emphasis is on increasing the branch network and strengthening its agency force while enriching its product portfolio
  • BPO is geared to up its performance through expanding and optimally utilising its seat capacity through existing new clients and raising its service quality.
  • In IT Services attention will be on building scalability to support business growth and improving delivery capabilities.
  • Telecom will be expanding its reach through a rollout in three new circles. Its debt restructuring will further strengthen the company.