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Aditya Birla Nuvo reports results for Q3 FY 2008

30th January, 2008

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Standalone
Consolidated
Net sales 25 per cent 58 per cent

Particulars
Standalone
Consolidated
 
Quarter ended 31 December
Quarter ended 31 December
 
2007
2006
Growth %
2007
2006
Growth %
Net income from operations
1,097.4
881.1
25
3,661.6
2,316.1
58
Operating profit (PBDIT)
172.4
151.5
14
265.2
307.9
(14)
Net profit (after minority interest)
84.0
52.7
59
30.2
55.3
(45)
EPS (Rs.)
9.0
6.1
48
3.2
6.0
(47)

Continued growth in consolidated revenues
The company's consolidated revenues at Rs. 3,661.6 crore have risen substantially by 58 per cent from Rs. 2,316.1 crore achieved during the corresponding quarter of FY 2007. Revenues from its subsidiaries and joint ventures, where the company has made substantial investments in the past, grew by 79 per cent to Rs. 2564.2 crore from Rs. 1,435 crore. All the businesses are on the growth trajectory.

  • The telecom business registered a 49 per cent rise in revenues at Rs.1708.1 crore vis-a-vis Rs.1148.2 crore with a subscriber base of 21.05 million as on 31 December 2007, growing at a higher clip than the industry. Idea has received Letter of Intent to operate in the remaining nine circles besides receiving spectrum allocation for Mumbai and Bihar circles. This is a significant move towards pan India presence.
  • The life insurance business soared by 185 per cent in revenues to Rs.1484.7 crore from Rs. 521.8 crore. New business premium is up by 163 per cent to Rs. 498 crore. The business garnered 6.6 per cent market share till December 2007 up from 5.3 per cent in FY2007, in terms of new business premium amongst private players. This was possible with the substantial investments that the company has made to strengthen the distribution reach. The business now has 339 branches and over 86,000 agents compared to 137 branches and over 57,000 agents in the beginning of the year.
  • In the garments business, revenues rose by 36 per cent to Rs. 278.8 crore from Rs. 204.7 crore. Controlled retail space has been expanded to 4.7 lakh square feet across 235 exclusive brand outlets.
  • The BPO business reported revenues of Rs. 403.1 crore. Three new clients including two fortune 500 companies were added during the quarter besides launching one new site in India.

The standalone revenues grew by 25 per cent from Rs. 881.1 crore to Rs. 1097.4 crore. The carbon black business posted the best ever quarterly revenues. Insulators and fertilisers business also contributed to the revenues growth. After the breakdown in the preceding quarter, the fertiliser plant is now stabilised and is running on full capacity.

Growth in standalone net profit by 59 per cent while investment phase of growth businesses had gestating impact on consolidated profitability

The standalone net profit during the quarter was higher by 59 per cent at Rs. 84 crore as against Rs. 52.7 crore attained in the corresponding quarter of last year. Insulators and carbon black businesses and income tax refunds contributed significantly to the earnings.

Despite higher standalone profitability, consolidated net profit at Rs. 30.2 crore is lower by 45 per cent against Rs. 55.3 crore attained in the corresponding quarter of the preceding year.

The consolidated net profit for nine months ended 31 December 2007 is Rs. 172.6 crore against Rs. 198.7 crore in corresponding period of previous year despite aggressive growth in telecom, life insurance, asset management and BPO businesses.

  • In the life insurance business, net loss increased during the quarter to Rs. 125.8 crore from Rs. 30.8 crore. This was largely due to rising share of new business premium and higher spends on expanding its distribution reach to regain the market share.
  • In the BPO business, net loss was higher at Rs. 38.2 crore, constrained by the weakening of US Dollar, besides ramping up and training costs for new sites.
  • Pre-launch expenses of stores in apparel retail subsidiaries affected the profitability of the garments business.

However, the telecom business, which is now in the profit phase, has reported a substantial jump of 108 per cent in net profit at Rs. 236.7 crore vis-a-vis Rs.113.8 crore earned in the corresponding quarter of the last year.

In most of our businesses, we are moving ahead with our investment plans to leverage growth opportunities. Aditya Birla Nuvo is very optimistic about meeting the challenges of strategic growth initiatives and enhancing its revenues and earnings. The investments pumped into the life insurance, BPO and garments businesses, which have created a stretch on profitability in the short term, will go long way for value creation for the shareholders.