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Aditya Birla Nuvo reports results for the fourth quarter and the financial year ended 31 March 2008
Consolidated turnover crosses USD 3 billion achieving 45 per cent year-on-year growth Aditya Birla Nuvo continued its growth journey during the year. All the businesses are progressing well on the designed path. - Consolidated revenues grew by 45 per cent from Rs. 8,366.8 crore to Rs. 12,134 crore
- Growth businesses contributed 75 per cent to the consolidated revenues
- Standalone revenues grew by 15 per cent from Rs. 3420.5 crore to Rs. 3924.2 crore and net profit rose by 8 per cent from Rs. 225 crore to Rs. 243.1 crore
- Consolidated net profit was lower by 46 per cent from Rs. 280.9 crore to Rs. 150.8 crore
- Growing share of new business in the life insurance business impacted profitability
- Consolidated net profit without life insurance rose by 25 per cent from Rs. 384.3 crore to Rs. 480.3 crore
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Rs. crore | Standalone results | | Particulars | Quarter ended 31 March | Full year ended 31 March | | | 2008 | 2007 | Growth % | 2008 | 2007 | Growth % | | Net income from operations | 1,130.8 | 859.7 | 32 | 3,924.2 | 3,420.5 | 15 | | Operating profit (PBDIT) | 180.0 | 143.8 | 25 | 633.9 | 603.8 | 5 | | Net profit | 70.5 | 62.3 | 13 | 243.1 | 225.0 | 8 | The company’s standalone revenues during the year grew by 15 per cent to Rs. 3,924.2 crore vis-à-vis Rs. 3,420.5 crore achieved in the preceding year. The carbon black, insulators and rayon businesses posted the highest ever annual revenues. Plant shutdown in the fertilisers business for nearly two and a half months, in the first half of the year, arrested higher growth. During the fourth quarter, standalone revenues at Rs. 1130.8 crore grew by 32 per cent vis-à-vis Rs. 859.7 crore reported in the previous year. Despite lower profitability in the fertilisers business due to plant shutdown, the company’s standalone net profit during the year is up by 8 per cent at Rs. 243.1 crore as against Rs. 225 crore achieved in the last year. The insulators and the carbon black businesses together with the income tax refunds contributed significantly to the earnings. During the fourth quarter, standalone net profit rose by 13 per cent to Rs. 70.5 crore as against Rs. 62.3 crore in the corresponding quarter last year.
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Rs. crore | Consolidated results | | Particulars | Quarter ended 31 March | Full year ended 31 March | | | 2008 | 2007 | Growth % | 2008 | 2007 | Growth % | | Net income from operations | 3,804.4 | 2,652.2 | 43 | 12,134.0 | 8,366.8 | 45 | | Operating profit (PBDIT) | 241.0 | 305.5 | -21 | 1,101.3 | 1,139.6 | -3 | | Net profit (after minority interest) | (21.9) | 82.2 | -127 | 150.8 | 280.9 | -46 |
The company’s consolidated revenues during the year are up by 45 per cent at Rs. 12,134 crore vis-à-vis Rs. 8,366.8 crore achieved last year. Revenues from its subsidiaries and joint ventures, where the company has made substantial investments in the past, grew by 66 per cent to Rs. 8,209.8 crore from Rs. 4,946.3 crore. All the businesses are on the growth trajectory.
| :: | The telecom business registered a 54 per cent rise in revenues at Rs. 6,720 crore. Its subscriber base as on 31 March 31 2008 grew to 24 million with 16.2 per cent market share in 11 operating circles up from 14.9 per cent at the beginning of the year. Idea received licenses to operate in the remaining nine circles and spectrum allocation for Tamil Nadu (including Chennai) and Orissa circles. The tower JV formed with Bharti Airtel and Vodafone, will support speedy roll out of services in five out of these nine new circles. Idea is targeting roll out of services in Mumbai and Bihar circles in the second quarter and in Tamil Nadu (including Chennai) and Orissa circles in the third quarter of FY2008-09. This is a significant move towards pan India presence. | | :: | The life insurance business revenues at Rs. 4,012.1 crore grew by 94 per cent as against Rs. 2,068.8 crore registered in the previous year. New business premium grew by 123 per cent to Rs. 1965 crore supported by expanded distribution reach and innovative product launches. Share of new business in total premium income rose from 50 per cent last year to 60 per cent in the reporting year. The business ranked sixth amongst private players with an improved market share of 6.2 per cent upto February 2008 vis-à-vis 5.2 per cent in the corresponding period last year. The business strengthened its product portfolio through launch of three new products – Gold Plus, Saral Jeevan and Platinum Plus. The business now has 339 branches and over 1 lakh agents compared to 137 branches and about 57,000 agents at the beginning of the year. Business is targeting to reach 1000 branches mark along with doubled agents force in FY2008-09. | | :: | The BPO business reported revenues of Rs. 1577.7 crore. 10 new clients have been added. Two new sites in India, one site in Philippines and three sites in North America were launched during the year taking global delivery capacities to 9,089 seats across 26 sites. Business under integration phase has been further impacted by weak dollar and US slow down. | | :: | In the garments business, revenues rose by 24 per cent to Rs. 1,025.8 crore from Rs. 830.4 crore. 115 new exclusive brand outlets (EBOs) were launched taking the controlled retail space to 5.1 lakh square feet across 253 EBOs. Two new subsidiaries were launched for bolstering presence in the large format apparel retailing space. | During the fourth quarter, consolidated revenues jumped by 43 per cent to Rs. 3804.4 crore from Rs. 2652.2 crore achieving growth across the businesses despite economic slowdown. Investment phase of growth businesses had gestating impact on consolidated profitability
The company’s consolidated net profit at Rs. 150.8 crore is lower by 46 per cent during the year, against Rs. 280.9 crore attained in the preceding year largely due to higher losses in the life insurance business. Without life insurance business, consolidated net profit has grown up by 25 per cent to Rs. 480.3 crore from Rs. 384.3 crore. The telecom business, which is now in the profit phase, more than doubled its net profit to Rs. 1042.3 crore vis-à-vis Rs. 502.2 crore earned in the last year. - In the life insurance business, net loss increased during the year to Rs. 445.3 crore from Rs. 139.7 crore. This was largely due to growing share of new business premium. The new business is fully profitable and income will accrue over the policy period. Higher spends on intensification of distribution network to regain the market share also impacted profitability.
- In the BPO business, net loss was higher at Rs. 88.9 crore, constrained by the weakening of US Dollar, besides ramping up of new sites.
- Pre-launch expenses of stores in apparel retail subsidiaries and impact of weak dollar on contract exports business lowered the profitability of the garments business.
During the fourth quarter, the higher share of new business premium in the life insurance business has depressed consolidated net profit. Promoters to fund growth of the company through preferential allotment
The shareholders of the company have approved allotment of 2.05 crore warrants on preferential basis to the promoters at the EOGM held in February 2008. Till March 2008, a sum of Rs. 718.7 crore has been received as 10 per cent upfront payment and on conversion of 17 lakh warrants into equity shares. Dividend
The board of directors has recommended a dividend of 57.5 per cent for the current year as against 55 per cent last year. The company will also pay a dividend tax (including surcharge and education cess) of 17 per cent. The dividend outgo will therefore be Rs. 63.9 crore. Growth initiatives - In its pursuit to become a pan India player, the telecom business is targeting to roll out Mumbai and Bihar circles in the second quarter and Tamil Nadu (including Chennai) and Orissa circles in the third quarter of FY2008-09. Roll out in the remaining circles is targeted within 6 to 9 months on the allocation of spectrum.
- Financial services businesses will continue to improve market positioning through scaling up of distribution reach, strengthening product portfolio through innovative launches, improving brand loyalty through transparent returns and deriving synergies through cross selling. It is also planned to explore and enter growth avenues in new business segments in the financial services space.
- BPO business is scaling its global delivery capacity with a focus on migration to high margin KPO segment and low cost new geographies.
- Madura Garments will aggressively pursue apparel retailing with the launch of large format family stores for Peter England and men's exclusive lifestyle stores for fashion and international brands through two separate subsidiaries besides creating its own exclusive brand outlets.
- Insulators business is expanding its capacity by 12,000 mt in two phases besides foraying in polymer insulators.
Most of our businesses are progressing well on the designed path to leverage growth opportunities. Aditya Birla Nuvo is optimistic about meeting the challenges of strategic growth initiatives and enhancing its revenues and earnings. The investments pumped, more specifically into the life insurance, BPO and garments businesses, which have created a stretch on profitability in the short term, will go a long way for value creation for shareholders.
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