Reports performance for the fourth quarter and the year ended 31 March 2005
27th April, 2005
|Net Sales||Rs.1860.62 crore||Rs. 486.95 crore|
|Net Profit before exceptional items||Rs.117.88 crore||Rs. 40.21 crore|
Three months ended 31 March
Year ended 31 March
|Net Income from operations||486.95||400.18||21.7||1,860.62||1,577.38||18.0|
|Profit before Depreciation & Tax||64.67||60.80||6.4||245.42||243.00||1.0|
|Profit Before Tax and Exceptional Items||44.04||40.51||8.7||164.73||161.48||2.0|
|Exceptional Item: VRS / Gain / (Loss) on long term strategic investments/ transfer of business (net)||(0.89)||(7.65)||19.95||(138.3)|
|Profit Before Tax||43.15||40.51||6.5||157.08||181.43||(13.4)|
|Provision for Tax||3.62||12.94||72.0||43.36||50.15||13.5|
|Less: Exceptional Items||(0.89)||(7.65)||19.95|
|Net Profit before Exceptional Items||40.21||27.57||45.8||117.88||111.33||5.9|
Indian Rayon, a major Aditya Birla Group company, has reported a turnover of Rs. 1860.62 crore for the year ended 31 March 2005, a growth of 18.0 per cent over the previous year's turnover of Rs. 1577.38 crore.
The Garments and Textiles business grew in revenues with a richer product mix, while Carbon Black witnessed volume growth.
Profit Before Tax and exceptional items at Rs.164.73 crores is higher by 2.0 per cent. The performance of Garments and Textile Division was partly offset by lower contribution from VFY and Carbon Black.
Exceptional items - VRS at Rayon division Rs.9.54 crore and gain on sale of investments/business Rs.1.89 crore against profit of Rs. 19.95 crore in the previous year have affected the net profit
Net profit for the year is Rs.113.72 crore against Rs. 131.28 crore in the previous year.
The board of directors has recommended a dividend of 40 per cent for the current year - same as that of last year. The company will also pay a dividend tax of 14.02 per cent. The dividend outgo will therefore be Rs. 27.31 crore.
Net Sales (Rs. Crores.)
|Unit||Year ended 31st March||Year ended 31st March|
|Viscose Filament Yarn||Tons||16,445||15,694||352.00||335.17|
The Garments Division has maintained its market leadership. Revenues have grown by 20.6 per cent to Rs. 472.40 crore vis-a-vis Rs. 391.68 crore recorded in the previous year with the divisional operating profit growing by 70.5 per cent to Rs. 39.20 crore against Rs. 22.98 crores last year. Two of the power brands - Louis Philippe in the fashion segment and Peter England in the popular segment -have crossed the Rs. 100 crore mark in revenues. Improved sales of higher price point products have boosted realisations and top line growth. Suits, blazers and jackets have performed well and have contributed towards a richer product mix.
The opening of 21 stores during the year has bolstered retail presence and the division has an aggressive retail expansion plan for the future both in malls and in high streets. Consistent brand building efforts, development of innovative merchandise and aggressive campaigns for each of the brands, have accelerated brand growth and equity with consumers.
Madura Garments received the 'Best Apparel Company of the Year' award at the Images Fashion Awards 2004 for the second consecutive year and at CMAI. The other accolades showered on it include "Allen Solly - Best Trouser Brand of the Year", "Allen Solly Women's Wear - Most Admired Women's Wear Brand of the Year", Louis Philippe and Allen Solly amongst top 100 Superbrands.
Madura Garment will continue to be an industry leader. Its focus will be on building further on consumer equity and market share in a competitive market. Delivering international standard retail experience at the new stores being opened will be a thrust area.
The Rayon division's revenues at Rs. 352.00 crore are higher by 5.0 per cent compared to Rs. 335.17 crore in the previous year. VFY realisations were effected with high industry stock and increased import from China. Despite this, sales volume rose by 4.8 per cent to 16,445 tonnes on the back of stabilization of the 1,000 tonnes Continuous Spinning Yarn (CSY) capacity and 105.9 per cent utilisation of the expanded capacity.
The chlor-alkali segment has been buoyant. The chemical plants were operating at 108.3 per cent of capacity. Better ECU realization also complemented the revenues.
To insulate itself from the present difficult market conditions, the company has embarked upon an ambitious program of quality improvement and cost reduction. The company has successfully implemented the revised work norms pursuant to long-term settlement with workers, which shall result in improvement in productivity by 35 per cent. Capex initiatives include raising Caustic Soda capacity by 85 tonnes per day through de-bottlenecking and setting up a captive power plant of 20 MW.
Carbon Black division
Carbon Black Division's revenues at Rs. 467.25 crore are up by 37.3 per cent vis-a-vis Rs. 340.30 crore attained in the previous year. Sales volume grew by 39.7 per cent to 165,095 tonnes, benefiting from the 40,000 tonnes brownfield expansion, completed in March 2004 and 10,000 tonnes added through de-bottlenecking. The plant operated at 101.6 per cent of the expanded capacity. Even as increased demand in the domestic market is being catered to, export volumes rose to augment sales.
Volatile crude oil prices remain a cause of concern. Realisation has improved with the pass on of the high CBFS cost to the customers. The division's emphasis will be on maximising realization through passing on the increase in feedstock cost and proactively managing its procurement.
The company has initiated work on the 50,000 tonnes brown-field expansion at Chennai at a capex of Rs. 105 crore.
The textiles division's revenues have gone up 14.9 per cent to Rs. 456.12 crore as against Rs. 397.00 crore in the previous year. Profits improved across all the product ranges. Exports constituted about 46 per cent of the division's revenues. The worsted segment has gained from value added yarns and stable wool prices. Flax yarn performance has bettered with the modernisation of the plant. The linen fabric has profited from retailing initiatives and the addition of 20 looms (1,15,000 mtrs per month). Expansion of wool combing facility by 4,000 TPA is operational with the installation of first card; the balance two cards will be installed in the next 2 months. A capex of Rs 22.5 crore has been planned for the expansion and modernisation of flax yarn and linen fabric facilities.
Insulators domestic marketing
The division's revenues stood at Rs. 100.12 crore. The outlook for the insulator business is promising given the power sector reforms, which will hike demand in the transmission and distribution segment.
The Company's consolidated revenues jumped 33.0 per cent from Rs. 2404.25 crore to Rs. 3189.26 crore. With the growth of new businesses, Indian Rayon's JVs and subsidiaries have contributed 42 per cent to the consolidated revenue, led by the life Insurance business.
The consolidated net profit surged 77.2 per cent at Rs. 58.64 crore. BPO business has turned positive for the whole year. IT business losses have come down drastically. In life insurance business losses have been pruned with the benefit of higher renewal business. A poor export market and higher input cost has adversely impacted the company's insulator JV.
Joint ventures and subsidiaries
The Company's joint ventures and subsidiaries are on track.
BIRLA NGK Insulators Private Limited has posted marginal growth in turnover to Rs. 168.83 crore. Its brown-field expansion of 8,000 tonnes has been commissioned in Dec 2004, which will enhance volumes. Guided by NGK experts, yield improvement efforts are being pursued.
Birla Sun Life Insurance Company has recorded a jump of 31.3 per cent in annualised premium income from new business to Rs. 607.42 crore. The total premium income has grown by 70.3 per cent to Rs. 915.47 crore. The business continues to retain the number two position amongst private life insurance companies with 10 per cent credit to single premium policy in line with international practice. The company is a front-runner in unit-linked products and alternate channel distribution. The company is focusing on increasing the distribution network by opening 11 new branches by June 2005. It currently has a presence in 33 cities across the country with 44 branches.
The IT Services business has reversed the downward trend in performance and has turned EBITDA positive for the year. Revenues stood at Rs. 82.13 crore. The company has increased its focus on Banking, Financial and Insurance (BFI) verticals and the Independent Software Vendor (ISV) segment, with greater thrust on high margin business.
The BPO business revenues have grown significantly from Rs. 69.43 crore in the previous year to Rs. 108.23 crore, while seat capacity has increased to 1,656 and headcount to 3,235. The Company is striving to further augment its client base and improve its seat utilization.
The sector-wise outlook for the company is promising
- Madura Garment's growth will be driven by retail expansion, positive market sentiments and growth initiatives
- VFY will gain from thrust on quality, captive power plant and a buoyant chlor-alkali segment
- Carbon Black will grow with volumes aided by proposed expansion, though volatile CBFS prices may remain a cause of concern
- Textiles will benefit from its focus on niche areas and a positive textile environment post-WTO
- The Insulator JV should contribute positively with the stabilisation of its new kiln and quality efforts
- Life insurance will yield profits from FY 2007 inline with the plan
- IT Services - reinforcement of its leadership team and focus on marketing will fuel growth.
- BPO is geared to enhance performance by further expansion and new clients addition
Overall, the outlook for the company is optimistic given the strategic thrust, growth and the capex initiatives taken in each of the businesses.
Mr. Sanjeev Aga appointed as Managing Director
Mr. Sanjeev Aga has been named the Managing Director of Indian Rayon by the Board, from 1 May 2005 and will report to the Chairman.
Indian Rayon has emerged as the Aditya Birla Group's vehicle for investment into new businesses such as garments, insurance, IT/ITES, and others, and has several JVs, e.g., with Sun Life Financial Inc., Canada, and NGK Insulators, Japan.
Given the diversity of businesses, the ambitious future plans of the company, and to sharpen governance practices, Mr. Aga will provide leadership for critical aspects of its business processes such as capital allocation, performance monitoring, and strengthening the strategy for each business within the overall strategic framework of Indian Rayon. While these roles are effectively played by the respective Heads of Business for their own business, for the company as a whole, Mr. Aga would serve as the nodal point - synergising and driving a coordinated approach into the future.
Mr. Aga, 53, joined as a Director on the Board of the Aditya Birla Management Corporation in April 2002, and has since been overseeing Indian Rayon's IT, ITES and Insulators businesses. He was earlier the Chief Executive of the Group's telecom JV, Idea Cellular. Beginning his career with Asian Paints, Mr. Aga rose to occupy senior positions in industry. Prior to joining Birla AT&T, he was Managing Director of Blow Plast.
Mr. Aga is an Honours graduate in Physics from St. Stephen's College, Delhi, and post graduated from IIM Kolkata.
Mr. G.P. Gupta appointed Director of the Company
The board has also co-opted Mr. Gupta as a director of the company. He is a director on the board of various companies. He was earlier the Chairman of IDBI and UTI.