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Aditya Birla Nuvo reports strong results for the quarter ended 30th June 2011

13th August, 2011

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Click here to view the quarterly investor presentation

Aditya Birla Nuvo Limited (ABNL), a US$ 4 billion conglomerate, which has a leadership position across its businesses, reports robust earnings growth.

  • Revenue grew by 24 per cent from Rs. 3,857 crore to Rs. 4,767 crore
  • Strong growth in EBITDA for the 10th consecutive quarter
  • Net profit surged by 70 per cent from Rs. 149 Crore to Rs. 253 Crore

Rs. crore
Consolidated results Quarter 1
  2011-12 2010-11  
Revenue
4,767 3,857 24%
EBITDA
808 556 45%
Net profit
253 149 70%

Dr Rakesh Jain, Managing Director, said, "Aditya Birla Nuvo continued its profitable growth journey having strengthened market positioning and delivered robust growth across its businesses. We remain focused to capture opportunities across the businesses to achieve the next higher level of growth."

Mr Sushil Agarwal, Whole Time Director and CFO, said, "Continuous pursuit of profitable growth across the businesses is reflecting in the strong financial results. Earnings displayed strong growth trend for the 10th consecutive quarter. We are committed to maintain this trend of superior performance while creating value for all the stakeholders."

Business-wise Review:

A) Financial Services

The Indian financial services industry is witnessing a phase of rapid evolution driven by regulatory changes and uncertain markets. Through this phase, Aditya Birla Financial Services (ABFS) continues to strengthen its position as a significant non-bank financial services player. Today ABFS is one of the two non bank players in India which rank among the top seven players in both life insurance and asset management businesses. Trusted by about 5.5 million customers and anchored by about 15,000 employees, ABFS has a nation-wide reach with more than 1,700 points of presence and about 200,000 channel partners.

During the quarter, ABFS posted consolidated revenue at Rs.1,330 crore, a growth of 4 per cent over the previous year. However, ABFS displayed a strong growth in profitability. Earnings before tax grew 2.5 times from Rs.78 Crore to Rs.177 crore. It's combined Assets under Management (AUM) stood at Rs.92,259 crore (about US$20.5 billion). Business-wise highlights follow:

  • Birla Sun Life Insurance (BSLI) :
    • Earnings before tax of BSLI surged year on year from Rs.9 Crore to Rs.144 Crore. Bottom-line growth was driven by the growing size of in-force book, balanced product mix, lower new business strain and better expense management.
    • While the private sector's weighted new business premium de-grew year on year by 39 per cent, BSLI reported the 2nd lowest de-growth among the top seven private life insurers. ULIP sales were impacted across the industry post new guidelines which became effective from 1st September 2010.
    • BSLI moved one step up to the 5th place among private sector players in terms of new business with an improved market share of 8.8 per cent up from 8.1 per cent in the first quarter of the previous year.
    • The gross premium income of BSLI grew to Rs.1,183 crore.
      • Driven by strong persistency, the renewal premium of BSLI is up by 29 per cent to Rs.860 crore.
      • The 13th month premium persistency ratio stood at 83 per cent as on 30th June 2011.
      • The new business premium income at Rs.322 crore de-grew due to lower ULIP sales.
      • However, non-ULIP portfolio has been strengthened; it has contributed to 47 per cent of the individual new business compared to 8 per cent in the first quarter of the previous year.
    • AUM of BSLI scaled up year on year by 19 per cent to Rs.19,984 crore.
    • No capital infusion was required during the quarter.
    • The Embedded Value ("EV") of BSLI has increased from Rs.3,816 crore as at 31st March, 2010 to   Rs.4,108 crore as at 31st March, 2011. EV reflects the value of future profits embedded in the in-force policies written by the life insurance company. The Value of New Business ("VNB") margin, a measure used for gauging profitability of new business, has increased to 27.5 per cent for the financial year 2010-11 up from 22.5 per cent for the financial year 2009-10.
  • Birla Sun Life Asset Management (BSAMC) :
    • BSAMC posted revenue at Rs.85 Crore and earnings before tax at Rs.30 crore.
    • The total average AUM (AAUM) grew quarter on quarter by 6 per cent to Rs.71,394 crore.
    • BSAMC ranks 5th in India with a market share of 9.1 per cent in terms of domestic AAUM. It achieved 3rd highest growth quarter on quarter among the top 5 players.
    • Equity AAUM (Including offshore) and alternate assets stood at Rs.15,349 crore. It garnered 18 per cent share in industry's net equity sales.
    • It has the highest number of funds in the 5 star category, reflecting its philosophy of delivering superior investment performance consistently.
  • Aditya Birla Finance (ABFL) :
    • The closing book size of ABFL, the NBFC arm, rose year-on-year by 77 per cent to around Rs.1,975 crore.
    • Revenue more than doubled to Rs.60 crore in line with growth in book size.
    • Earnings before tax at Rs.10 crore remained flat due to increase in the cost of funds.
  • Aditya Birla Private Equity (ABPE) :
    • ABPE is targeting the first closure of "Sunrise Fund" - its 2nd private equity fund in August 2011.
  • Aditya Birla Money and Aditya Birla Money Mart (Broking and Wealth Management) :
    • In both the businesses, losses were reduced quarter on quarter.
    • Aditya Birla Money Mart is amongst the top mutual fund distributors in the country, the largest corporate agent for Birla Sun Life Insurance and a significant player in wealth management.
    • Retail market share of Aditya Birla Money in the cash segment enhanced quarter on quarter. Market share in the commodities segment has also increased.
    • Aditya Birla Insurance brokers, the general insurance advisory arm, wrote a premium of Rs.84 crore.

B) Telecom :

  • A strong 32 per cent year on year growth in total minutes on the network drove earnings growth, absorbing about 6 per cent decline in average revenue per minute.
  • Revenue rose by 24 per cent to Rs.4,516 crore and EBITDA soared by 35 per cent to Rs.1,225 crore.
  • Scale benefit led cost efficiencies and rising revenue market share also contributed.
  • Net profit de-grew from Rs.201 crore to Rs.177 crore. With the introduction of 3G services, additional expenses of amortisation of 3G spectrum fee (Rs.66 crore) and charging of related interest cost  (Rs. 123 crore) has impacted profits.
  • With total minutes of usage of 1.2 billion per day, Idea is among the top 10 operators in the world.
  • Idea ranks 3rd in India in terms of wireless revenue market share at 13.6 per cent during January - March 2011 up from 13.3 per cent in the previous quarter.
  • Idea has the highest active subscribers' ratio in the industry at 92 per cent as on 31st May 2011 and is the leading net subscribers' gainer post launch of mobile number portability, reflecting its brand strength.
  • Idea currently offers 3G services in 19 service areas.
  • Idea is serving a large base of more than 95 million subscribers as on 30th June 2011.

C) Fashion & Lifestyle :

  • Madura Fashion & Lifestyle, the largest premium branded apparel player in India, achieved a robust 39 per cent year on year growth in revenue at Rs.484 crore.
  • Madura posted a strong 39 per cent volume growth despite the rise in apparel prices. Apparel prices were increased to pass on rise in cotton prices and levy of excise duty.
  • EBITDA grew by 27 per cent to Rs. 24 crore. Increase in volumes and prices compensated for cost push and higher discounting.
  • The retail channel attained 43 per cent growth driven by same stores sales growth and expanded retail space. Like to like stores sales grew year on year by 16 per cent.
  • Madura launched 70 Exclusive Brand Outlets (EBOs) to reach 948 EBOs spanning across 1.4 million square feet.

D) IT-ITeS :

  • Aditya Birla Minacs has recently been named among the 'top five emerging outsourcers to watch out for in North America' by Frost and Sullivan.
  • It sold Total Contract Value of US$128 million and won three new clients during the quarter.
  • Revenue grew year on year by 21 per cent to Rs.471 crore supported by conversion of order book.
  • About 800 headcounts were added to support growth.
  • In the direction of diversifying geographical presence, Aditya Birla Minacs added one more centre in Philippines with a capacity of 285 seats.
  • EBITDA remained flat at Rs.35 crore as the rise in manpower costs and ramp up expenses for new contracts contained profitability.

E) Manufacturing :

  • Manufacturing businesses posted strong growth in revenue and profitability
  • The combined revenue scaled up by 43 per cent to Rs.1,392 crore
  • EBITDA grew by 21 per cent from Rs.172 crore to Rs.208 crore.
  • Operating margin stood at 15% and return on average capital employed (ROACE) at 25 per cent.
  • In the Textiles business, strong volume growth in the linen segment and improved realisation across all the segments augmented earnings growth.
  • A 32 per cent volume growth and higher power sales in the Carbon Black business also contributed.
  • Higher urea and agri-input sales in the Agri-business supported earnings growth. In first quarter of the previous year, the urea plant was under an annual maintenance shut-down for 21 days.
  • In the Rayon and Insulators businesses, higher input and fuel costs were partly set off by increase in realisation.

Financial Position

  • ABNL has a strong standalone balance sheet with Net Debt to Equity at 0.57 and Net Debt to EBITDA at 3.2.

About Aditya Birla Nuvo Ltd.

Aditya Birla Nuvo is a US$4 billion conglomerate. Over the years, it has built successful ventures into the sunrise sectors viz., Financial Services (Life Insurance, Asset Management, NBFC, Private Equity, Broking, Wealth Management and general insurance advisory), Telecom, Fashion and Lifestyle and IT-ITeS. The razor sharp focus on manufacturing businesses has made it a leading player in Agri-business, Carbon Black, Insulators, Rayon and Textiles sectors.

Aditya Birla Nuvo is part of the Aditya Birla Group, a US$35 billion Indian business group having multinational presence. The group operates in 33 countries across the globe, is anchored by an extraordinary force of 133,000 employees belonging to 42 nationalities and derives more than 60 per cent of its revenue from its overseas operations.

Vision
To become a premium conglomerate with market leadership across businesses, delivering superior value to shareholders on a sustained basis.

Certain statements in this  "Press Release" may not be based on historical information or facts and may be "forward looking statements" within the meaning of applicable securities laws and regulations, including, but not limited to, those relating to general business plans & strategy of the Company, its future outlook & growth prospects, future developments in its businesses, its competitive & regulatory environment and management's current views & assumptions which may not remain constant due to risks and uncertainties. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include global and Indian demand supply conditions, finished goods prices, feed stock availability and prices, cyclical demand and pricing in the Company's principal markets, changes in Government regulations, tax regimes, competitors actions, economic developments within India and the countries within which the company conducts business and other factors such as litigation and labour negotiations. The Company assume no responsibility to publicly amend, modify or revise any statement, on the basis of any subsequent development, information or events, or otherwise. This  "Press Release" does not constitute a prospectus, offering circular or offering memorandum or an offer to acquire any shares and should not be considered as a recommendation that any investor should subscribe for or purchase any of the Company's shares. The financial figures in this "Press Release" have been rounded off to the nearest Rs.one Crore. For currency conversion, one USD is considered to be equal to Rs.45. The financial results are consolidated financials unless otherwise specified.