Mumbai, Maharashtra, India
Aditya Birla Nuvo has posted excellent results for the year ended 31st March 2006.
Its consolidated turnover of Rs. 4759.36 Crores, is up by 49.2% over Rs. 3189.11 Crores achieved in the previous year, also placing the company in the billion dollar league. Net profit has leapfrogged to Rs. 190.67 Crores against Rs. 58.72 Crores in the previous year.
Revenue from its subsidiaries and associates rose from Rs. 1328.26 Crores to Rs. 2148.95 Crores. Their performance has been impressive, with Nuvo's share in profit of JV's and Subsidiaries jumping from negative Rs. 55.00 crores to positive Rs. 13.74 crores, mainly driven by the BPO, and the Telecom business. During the year, the Company increased stake in Idea Cellular from 4.3% to 20.7%
The Company's stand-alone turnover at Rs. 2610.40 Crores, grew by 40.3% vis-a-vis Rs. 1860.84 Crores attained in the previous year. This is inclusive of Rs. 368.98 crores reached by its fertilisers business, incorporating the period from September to March. The Company's stand-alone operating profit, also reflecting fertiliser's profit of Rs.75.95 Crores, is up by 56.5% at Rs. 413.46 Crores. Stand-alone net profit is higher at Rs. 176.92 Crores against Rs. 113.72 Crores, despite a major rise in interest on borrowings to fund the acquisition of the 16.5% additional stake in Idea Cellular.
Dividend
The Board of Directors has recommended a dividend of 50% for the current year as against 40% last year. The company will also pay a dividend tax of 14.025%. The dividend outgo will therefore be Rs. 42.71 Crores.
Madura Garments
Several new stores augmented Madura Garment's, 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 has resulted in an upsurge in brand equity, further entrenching its leadership status.
MG's revenue has thus soared by 31.3% to Rs. 620.55 Crores vis-a-vis Rs. 472.63 Crores 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%.
The thrust on Contract Exports towards providing full service is paying off. To give a fillip to Madura Garment's Contract Exports business, a capex of Rs. 46 Crores 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% over the previous year. Aided by strong volume growth, revenues increased by 9.5% to Rs. 385.55 Crores as against Rs. 352.00 Crores 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 Crores (Rs.87.62 crores) despite high input prices and maintenance cost. The 20MW 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% 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% 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 Crores grew by 20.8% vis-a-vis Rs. 467.25 Crores attained in the previous year. Operating profits are higher by 19.7% at Rs.92.37 Cores. 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% to Rs. 524.80 Crores as against Rs. 456.12 Crores in the preceding year. Operating Profits jumped by 69.9% 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 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 1st September, 05 to 31st March, 2006, representing 115% of re-assessed capacity. The net turnover stood at Rs. 368.98 Crores for the seven months ending March 31, 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% volume growth in the insulators business. Revenue at 135.89 crores reflect a 35.7% 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 crores, a growth of 34.2%. Led by NGK experts, yield improvement efforts are being pursued. The JV has substantially curtailed its losses from Rs.25.33 crores in the previous year to Rs.3.62 crores in the current year.
Other Joint Ventures and Subsidiaries
At Birla Sun Life Insurance, the total premium income has grown by 36.7% to Rs. 1237.84 Crores. The Individual new business annualised premium advanced by 16% at Rs. 711.11 Crores. The Group business was impacted by the intense pricing pressure from the 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% to Rs. 163.30 Crores vis-a-vis Rs. 108.23 Crores 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 Crores. Gross margins improved from 36% to 39% 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% to 7.37 million. Revenues for the year showed an impressive jump of 31.1% at Rs. 2965.78 Crores. The Company has an 8.2% 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 September 1, 2005. Its accounts include the seven months financials of the 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 January 27, 2006. However, the sanction from 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 Garment 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.
-- IT Services - attention will be on building scalability to support business growth and improving delivery capabilities
-- Telecom - will be expanding its reach through a roll out in three new circles. Its debt restructuring will further strengthen the company.
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Dr Pragnya Ram, Aditya Birla Group, +91 (022) 5652 5000 pragnyaram@adityabirla.com
Source: Aditya Birla Group (Business Wire India)
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