Standalone Financial Performance For 2011-12
Blue Star Limited reported Total Operating Income of Rs 2700.28 crores for the year ended March 31, 2012, compared to Rs 2858.92 crores earned last year, representing a decline of 6%.
Operating loss (PBIDT excluding Other Non-Operating Income) for the year stood at Rs 11.06 crores as compared to the Operating Profit of Rs 248.58 crores in FY11. The unfavourable economic climate, cost overruns in electro mechanical projects, liquidity crunch and higher input costs were responsible for the significant decline in profitability.
Financial Expenses for the year increased from Rs 24.36 crores to Rs 70.25 crores due to higher interest costs and foreign exchange losses on account of strengthening of the dollar.
Consequently, there was a Net Loss of Rs 89.15 crores as compared to a Net Profit of Rs 155.00 crores last year.
The Electro Mechanical projects and Packaged Airconditioners business accounting for 58% of the Company's total revenues, declined 17% during the year, while segment results fell sharply to a loss of Rs 85.09 crores as compared to a profit of Rs 175.87 crores in FY11. Cooling Products revenue registered an increase of 18% in the year. However, Segment results declined by 3%. The revenues of the Professional Electronics and Industrial Systems business grew marginally by 3%, while segment results declined 4%.
Carry Forward Order Book as on March 31, 2012 declined marginally by 2% to Rs 1917 crores compared to the order book of Rs 1960 crores as at March 31, 2011.
The Board of Directors have proposed a dividend of Rs 1.00 per equity share (Face value of Rs 2.00).
Consolidated Financial Performance For 2011-12
On a consolidated basis, Total Operating Income stood at Rs 2819.86 crores for the year ended March 31, 2012. The consolidated financial results include the results of the Company's wholly owned subsidiary Blue Star Electro Mechanical Limited, joint ventures namely, Blue Star M& E Engineering SDN BHD, Malaysia, Blue Star Qatar (WLL) and Blue Star Design & Engineering Limited and the share of profit in the associate company Blue Star Infotech Limited.
Operating loss (PBIDT excluding Other Non-Operating Income) for the year was Rs 22.72 crores.
Net Loss stood at Rs 105.10 crores for the year as compared to the Net Profit of Rs 160.96 crores registered last year.
Performance For Q4FY12
Total Operating Income at Rs 813.60 crores declined by 11% over the same period last year.
Operating loss for the quarter was Rs 37.40 crores compared to PBDIT of Rs 97.45 crores earned in Q4FY11.
Net Loss was for the quarter was Rs 45.37 crores as compared to Net Profit of Rs 56.85 crores registered during the same period last year.
Segment Performance For 2011-12
The Electro Mechanical Projects business in Segment 1 was severely impacted due to a number of adverse developments. Many projects had slowed down due to tight liquidity conditions leading to undue delay in collections from customers. This resulted in poor cash flow in the business, higher borrowings and increased interest cost. Due to inflationary conditions the Company reviewed the majority of projects under execution to assess actual costs incurred and expected costs to completion. This revealed substantial cost over-runs and erosion of gross margin on most of the fixed price contracts. In accordance with Accounting Standard AS7, the cost increase was absorbed in the accounts for 2011-12 resulting in losses and reduced revenues.
In the Cooling Products segment, while top-line growth was favourable, margins were under pressure due to higher input costs and significant increases in fuel and freight costs. Consequently, the segment result was marginally lower. The Professional Electronics and Industrial Systems business was also affected by the general business slowdown.
Overall Segment Results remained positive in spite of the loss in Electro Mechanical Projects and Packaged Airconditioning Systems. But heavy interest costs and foreign exchange losses along with unallocable expenditure resulted in the disappointing Loss Before Tax.
The Company has taken vigorous steps to correct the decline in profitability. Strict controls have been implemented to improve the quality of new orders. There is a multi-pronged drive to improve profit margins through price increases, value engineering and cost control. Moreover, a focus on working capital management and cash flow will keep borrowings and interest cost under control. There is already a reduction in borrowings by about Rs 250 crores from the peak level of last September.
Though the economic environment remains challenging and uncertain, the Company is confident of returning to modest profitability in 2012-13. The results should become increasingly evident as the year progresses. And if economic growth revives, it can only be of additional help in getting the Company back to good health.
For additional information, please contact: B Thiagarajan, President, Airconditioning & Refrigeration Products Group, Blue Star Limited, Bandbox House, 254D, Dr Annie Besant Road, Worli, Mumbai – 400 030 email: firstname.lastname@example.org Telephone: 09821078098.