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Aditya Birla Nuvo reports excellent performance for Q3 FY 2006

31st January, 2006

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3rd Quarter
Nine Months
Consolidated Net Sales Rs. 1150.15 crore 42% Rs. 2868.99 crore31%
Consolidated Net Profit Rs. 26.00 crore 129% Rs. 96.59 crore308%

Particulars
Consolidated
 
Quarter ended 31 December

Nine months ended 31 December

 
2005
2004
Growth %

2005

2004

Growth %

Net income from operations
1,150.15
812.62
41.5
2,868.99
2,193.30
30.8
Operating profit
143.99
68.18
111.2
338.65
181.19
86.9
Profit before tax
41.14
25.85
59.2
142.80
58.75
143.1
Exceptional items
(1.75)
(3.76)
(53.5)
(3.06)
(6.76)
-
Provision for taxation
17.48
15.47
51.40
39.92
-
Net profit (after minority interest)
26.00
11.35
129.1
96.59
23.68
307.9
EPS (Rs.)
4.04
1.80
-
15.87
3.67
-
VRS at Rayon division
(1.75)
(1.81)
-
(3.06)
(8.97)
-
Sale of global export / strategic investment
-
(1.95)
-
-
2.21
Exceptional gain / (loss)
(1.75)
(3.76)
-
(3.06)
(6.76)
-

Aditya Birla Nuvo, a major Aditya Birla Group company, has posted good results for the quarter ended 31 December 2005.

Its consolidated turnover of Rs. 1150.15 crore, is up by 41.5 over Rs. 812.62 crore achieved in the corresponding quarter of the previous year. Net profit has leapfrogged to Rs. 26.00 crore against Rs. 11.35 crore in the corresponding quarter of the previous year.

While the company's stand-alone turnover at Rs. 594.13 crore grew by 20.2 per cent vis-a-vis Rs. 494.40 crore achieved in the corresponding quarter of the previous year, the revenue from the subsidiaries and associates have increased from Rs. 318.22 crore to Rs. 556.02 crore.

The company's stand-alone operating profits were up by 11.9 per cent at Rs. 81.70 crore. However, standalone net profit declined to Rs. 25.45 crore against Rs. 28.65 crore due to a major rise in interest on borrowings to fund increase in Idea Cellular stake to 20.73 per cent. The subsidiaries and JVs have performed well with consolidated profit jumping from Rs. 11.35 crore to Rs. 26.00 crore, mainly on the back of strong performance of the BPO business.

All businesses of Aditya Birla Nuvo, including its JVs and subsidiaries, have contributed significantly either through improving profits or cutting down losses.

Particulars
Sales volume

Net sales (Rs. crore)

Unit
Quarter ended
31 December

Quarter ended
31 December

2005
2004
2005
2004
Garments Lakh pcs
26.8
19.1
170.76
129.89
Viscose filament yarn Tonnes
4,663
4,667
102.06
96.32
Carbon black Tonnes
46,140
41,499
149.83
119.43
Textiles
139.81
117.44

Madura Garments
At Madura Garments, the opening of new stores has bolstered its already salient retail presence, with retail space at 3.1 lakh sq ft. The division is aggressively expanding large format exclusive brand outlets, coupled with selected stores, to provide a retail experience of an international standard. The division launched the Espirit brand in India. The response has been encouraging.

MG's revenue has soared by 31.5 per cent to Rs. 170.76 crore vis-a-vis Rs. 129.89 crore recorded in the corresponding quarter of the previous year. Strong growth across its product range particularly in shirts, trousers and suits boosted revenue growth. Operating Profit is up by 92.3 per cent supported by Louis Philippe, Van Huesen and Allen Solly - its fashion brands, and Peter England - its popular brand. While fashion brands benefited from enriched product mix, its popular brand maintained strong growth momentum by enhancing its effective reach. The division developed innovative merchandise and exciting communication campaigns, which did well during the festive season.

Consistent brand building efforts, innovative merchandise and aggressive campaigns for each of the brands, has driven growth and brand equity. Madura Garments will continue to maintain its high market share in the industry.

The focus on contract exports towards providing full service has also started reaping benefits. To give a fillip to Madura Garment's contract exports business, a capex of Rs. 46 crore has been planned in the wholly owned subsidiary, Madura Garments Exports Ltd. created for this purpose, which will eventually carry out all the contract export business.

Rayon division
The Rayon division's revenues at Rs. 102.06 crore increased by 6.0 per cent compared to Rs. 96.32 crorein the corresponding quarter of the previous year. While VFY volumes have been maintained at 4663 tonnes, realisations are marginally higher. In the chlor-alkali segment, expanded caustic soda capacity has been fully utilised, leading to enhanced revenues. ECU realisations declined by 21.0 per cent, significantly impacting the profits. The division's operating profit declined to Rs. 18.45 crore (Rs.25.87 crore). Progress on the 20 MW captive power plant is on schedule.

Carbon Black division
The Carbon Black division has shown robust performance. Revenues at Rs. 149.83 crore are up by 25.5 per cent vis-a-vis Rs. 119.43 crore attained in the corresponding quarter of the previous year. Total volumes grew by 11.2 per cent at 46,140 tons, aided by the robust auto sector growth. Realisation is up by 12.8 per cent supported by a change in market and segment mix and the partial passing on of the high CBFS prices to the customers. While the company is pursuing environmental clearance for a 50,000 TPA brownfield expansion, the division is also exploring possibilities to set up a greenfield project of 60,000 TPA in western India.

Textiles division
The Textiles division's revenues have gone up 19.0 per cent to Rs. 139.81 crore as against Rs. 117.44 crore. Operating Profit jumped by 76.0 per cent helped by strong performance across segments. The linen fabric segment benefited from the growing awareness and usage. Worsted segment has gained from value added products and increased volumes due to expansion of the wool combing facility. Synthetic yarn performance was sustained with an increasing share of specialty yarns.

Insulators domestic marketing
Strong demand in transmission and distribution segment helped in achieving 17 per cent volume growth in insulators. At Rs. 29.50 crore, the revenue growth of 9.0 per cent was supported by higher volumes and better realisation.

Birla NGK Insulators Private Limited, the 50:50 JV with NGK, has posted a turnover of Rs. 60.60 crore, a growth of 29.6 per cent. Guided by NGK experts, yield improvement efforts are being pursued. The JV has posted positive profit in this quarter.

Other joint ventures and subsidiaries
At Birla Sun Life Insurance, the total premium income has grown by 31.8 per cent to Rs. 271.15 crore. The first year premium in the individual business has grown by 6.1 per cent. The group business, however, was impacted by the intense pricing pressure from competitors. The company has 55 branches and a 13,918 strong agency force. As a mid-term initiative, it is focusing on expanding its branch network by 30 in the next quarter. It has enriched its product portfolio by introducing new target-specific plans.

At TransWorks, revenues have risen significantly by 56.9 per cent at Rs. 42.22 crore vis-a-vis Rs. 26.92 crore in the previous year. During the quarter, two new clients were added and business from existing clients was ramped up. The company has also increased its seat capacity to 2,047 and strengthened its employee base to cater to the fast growing business. The company is optimising its infrastructure utilisation leading to improved margins. The company expects to wipe off all carried forward losses by the next quarter.

At PSI Data Systems, the business has turned around into black with positive net profits on improved margins. Revenues stood at Rs. 21.14 crore. Though revenue is on cautious uptrend, it has built a strong pipeline in every segment. The company's focus is on core verticals with a greater thrust on high margin business.

At Idea Cellular, subscriber base grew by 37.9 per cent to 6.47 million. Revenues for the quarter showed an impressive jump of 24.2 per cent at Rs. 766.09 crore. The company has 8.9 per cent market share in the total mobility segment and ranks fifth in the cellular industry. Idea is restructuring its debt portfolio to reduce the finance burden and realign tenure with business objectives.

Consolidation of Indo Gulf Fertilizers and Birla Global Finance with Aditya Birla Nuvo
The company is taking necessary steps to complete the landmark corporate restructuring to merge Birla Global Finance and Indo Gulf Fertilisers, with Aditya Birla Nuvo. The Scheme of Amalgamation between Indo Gulf Fertilisers and Aditya Birla Nuvo has been sanctioned by the Hon'ble High Court, Gujarat at Ahmedabad on 10 January 2006. Further, the scheme of amalgamation between Birla Global Finance and Aditya Birla Nuvo has also been sanctioned by the Hon'ble High Court, Mumbai on 27 January 2006. These approvals are subject to the sanction of the scheme filed by Indo Gulf Fertilisers at Allahabad High Court, Lucknow Bench and by Aditya Birla Nuvo at Ahmedabad High
Court, Gujarat respectively.

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

  • Madura Garments will focus on retail expansion, optimising cost and brand transformation. In export manufacturing, strengthening manufacturing, design and product development is on the cards
  • VFY's thrust on improving quality will continue. It is striving to improve productivity and reduce costs to offset the declining ECU realisation
  • Carbon Black will push volumes in domestic market and pass on the increased CBFS cost to its customers.
  • Textiles will gain from the focus on niche areas
  • The Insulator JV will continue its emphasis on higher value products and yield improvement
  • Birla Sun Life insurance's thrust 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 by acquiring new clients and raising its service quality.
  • In IT Services the focus on marketing and building specialisation/differentiation will fuel growth. Telecom's initiatives in increasing its reach by rollout in three new circles and debt restructuring, will strengthen the company.