Carborundum Universal Ltd Annual Sales grew by 24%, Profit after tax up by 28%

The Board of Directors met today and approved the audited financial results for the year ended 31st March 2007.

Q 4 performance
Sales grew to Rs. 148 crore, a growth of 22 per cent over the sales for the corresponding quarter of last year (Rs.121 crore). Profit before interest and tax (before exceptional items) grew by 24 per cent. Profit before tax however grew by 12 per cent due to higher interest costs resulting from large capital investments. Profit after tax increased from Rs.11 crore to Rs.17 crore.

Full year performance
Capitalizing on the buoyancy in the economy and the stepped up performance in the export market, net sales recorded a 24 per cent growth over previous year.

Domestic sales grew by 21 per cent from Rs. 378 crore to Rs. 456 crore. The increased pace of economic growth in India, together with Company's product, market and customer initiatives resulted in overall expansion of the market size for the Company's products. The Company increased / maintained its market share in its product lines. Strong growth was witnessed in all three business segments viz. abrasives (21 per cent), ceramics (17 per cent) and electrominerals (32 per cent). Sales growth was driven by good order inflow from all customer segments.

Export sales increased from Rs. 47 crore to Rs. 71 crore, a growth of 52 per cent. Strong growth was achieved in all the product lines - abrasives grew by 35 per cent, ceramics by 56 per cent and electrominerals by 126 per cent. The strong export performance was an outcome of the increasing visibility for the company's products in the international markets created by the marketing initiatives of the Company's subsidiaries / offices coupled with increased product acceptance from well established customers. The upgradation and expansion of the manufacturing facilities in India, in the last two years, helped to foster growth in exports.

The profits from operations before interest and tax and excluding profit on sale of fixed assets and investments registered a strong growth rate of 24 per cent. Interest costs have risen by over 150 per cent in the current year as a result of the aggressive capital investments in building a strong back end, the benefits of which will be reaped over the next 1 to 3 years. Notwithstanding the increase in interest, the Company registered a growth of 18 per cent in profits before exceptional items and tax by increasing volumes, while keeping a control on fixed costs.

Investments for scaling up and upgrading production facilities were undertaken across all business segments. A total capital expenditure of Rs. 108 crore was incurred during the year taking the total investment in capital expenditure during the last 3 years to Rs. 215 crore.

In 2005-06 there was an exceptional item of Rs. 32 crore, being profit on sale of investments, which accounted for the profit before and after tax being higher than that of that for 2006-07.

The Company completed the acquisition of 49 per cent stake in Sanhe Yanjiao Jingri Diamond Industrial Company Ltd. ('Jingri') in October 2006. The acquisition has helped to fulfill the long felt need of the Company for a Chinese base for manufacturing its products. The joint venture is in the process of setting up a bonded abrasive manufacturing facility for commissioning in 2007-08.

CUMI Consolidated Performance
All major subsidiaries and joint ventures performed well. Consolidated net sales (including proportionate share of income in joint ventures) went up by 28 per cent. PBIT before exceptional items grew by 25 per cent. PAT before exceptional items increased by 35 per cent.

Dividend
The Board has recommended a dividend of 75 per cent (i.e. Rs 1.50 per equity share of Rs 2/- each) for 2006-07. Last year a dividend of 180 per cent (which included a one time special dividend of 120 per cent in view of the significant income arising from sale of investments) was paid.

Board of Directors
At the meeting held today, the Board has inducted Mr Sridhar Ganesh, Director - HR of the Murugappa Group as a director. He is a human resource specialist with about 34 years of experience in industry and has held senior positions in the HR function in Berger Paints India Limited, Cadbury India Limited and Cadbury Schweppes plc., U.K.

Source : Equity Bulls

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