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BILT: Cost control supports bottomline

Oct 17, 2001

Ballarpur Industries Ltd. (BILT) has reported a flat financial performance for the first quarter ended September '01. The company's financial year ends in June. The consolidation process with the erstwhile Sinarmas Pulp & Paper (I) Ltd. is expected to be completed in the current financial year.

(Rs m) 1QFY01 1QFY02 Change
Net Sales 3,522 3,548 0.8%
Other Income 11 16 43.8%
Expenditure 2,812 2,799 -0.5%
Operating Profit (EBDIT) 710 750 5.7%
Operating Profit Margin (%) 20.1% 21.1%  
Interest 300 321 6.8%
Depreciation 169 194 14.9%
Profit before Tax 252 251 -0.3%
Tax 78 77 -1.3%
Profit after Tax/(Loss) 174 174 0.2%
Net profit margin (%) 4.9% 4.9%  
No. of Shares (eoy) 72 72  
Diluted Earnings per share* 9.7 9.7  
P/E Ratio   4.1  
* annualised      

Corporate India seems to be responding to the challenges arising from the slowdown. The marginally higher sales coupled with a control on costs has led to operating margins (OPM) increasing by 100 basis points. While writing & printing paper contributed to 71.8% of the net turnover excluding inter-division transfers, the division constituted 85% of the operating profits. The division has the highest OPM of 25%.

Segment-wise Reporting % of sales % of O.P OPM
Writing & Printing Paper 56.4% 85.0% 24.9%
Coated Paper 6.1% 2.4% 6.6%
APR Pulp 11.3% 12.3% 18.0%
Chemicals 1.8% -0.6% -5.3%
Others 24.5% 0.8% 0.6%
* For 1QFY02
The interest and depreciation costs eat a large part of the company's operating profits. Consequently, although operating profits rose by 5.7% pre-tax profits were marginally lower. Adjusting for other income, pre-tax and post-tax profits would decline by 2.3% and 2.8% respectively. Effective tax has increased marginally by 30 basis points to 30.9%.

Since start of the year the scrip has declined by 38.5% since start of the calendar year. The company operates in a commodity business and paper prices are likely to have weakened. However, BILT is trying to beat the cyclicality by adopting a branding strategy for their writing & printing paper. At Rs 39.7 the scrip is trading on a multiple of 4.1x 1QFY02 annualised earnings.

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