Companias
BHARAT PETROLEUM
Pricing Problem
I
The year 2004-05 witnessed a sharp upward spiralling of international crude oil prices. During 2004-05, BPCL’s net sales have risen by 22 per cent to Rs 58,969 crore over 2003-04. However, net profit has dipped sharply by 43 per cent to Rs 965 crore. The combined refinery throughput at BPCL’s refineries at Mumbai, Kochi and Numaligarh has increased by just 1.5 per cent to 19.10 million metric tonnes (MMT). BPCL has been exporting naphtha and fuel oil from its Mumbai refinery. The company’s exports have increased by 7 per cent to 519.9 thousand metric tonnes (TMT) over 2003-04. Export revenue has jumped by 57.8 per cent to Rs 865.6 crore. During the year under review, BPCL’s crude oil imports have risen by 7 per cent to 11.12 MMT. LPG imports were stepped up to 285 TMT from just 20 TMT in the previous year.
During 2004-05, BPCL has introduced a new product – Hi Speed Diesel. The company has ventured into the defence sector by supplying aviation lubricants to the Indian Navy, Kochi and Coast Guard, Goa. The company has recently commissioned a natural gas distribution project in Gandhinagar district of Gujarat.
BPCL has signed a memorandum of understanding (MoU) with the union petroleum and natural gas ministry for 2005-06, which includes achieving a crude throughput of 10.3 million metric tonne per annum (MMTPA) at its Mumbai refinery.
The merger of BPCL and its subsidiary Kochi Refinery has been approved by the company’s board of directors and the procedure is expected to be completed by the end of the current financial year.
In April 2005, a joint venture company, Central India Gas Company, has been incorporated for city gas distribution in Kanpur and the surrounding areas by BPCL along with GAIL. In July 2005, the company has completed its Mahul refinery expansion project. BPCL has earmarked an investment of about Rs 450 crore to add about 600 retail outlets to expand its retail presence to 7,000 outlets during the current year. It has revised the cost of its Bina refinery project to Rs 9,100 crore from the original estimate of Rs 6,354 crore. Bharat Oman Refineries, the joint venture company floated by BPCL and Oman Oil Company, is setting up the project in Madhya Pradesh.
Despite good sales BPCL has suffered in profitability during both the quarters of 2005. The company’s financial performance has been adversely affected due to higher crude oil prices not being fully compensated by higher product prices. During April-June 2005, the company’s net sales have increased by 22.6 per cent to Rs 16,015 crore over April-June 2004. But, the company has suffered a loss of Rs 431 crore against a profit of Rs 147 crore over the same period of the previous year. For the quarter ended September 2005, the company has posted a 21 per cent rise in net sales to Rs 16,207 crore over the same period of the previous year. However, it has witnessed a loss of Rs 203 crore during July-September 2005 against a profit of Rs 321 crore in the same quarter of 2004.
m INDO GULF FERTILISERS
Challenging Times
I
During 2004-05, IGF has posted a 17 per cent rise in its net sales to Rs 678 crore over 2003-04. However, the company has posted a 37 per cent decline in the net profit to Rs 56.9 crore owing to higher total expenses compared to those in 2003-04. The company’s foreign exchange earnings have been nil during the past two years. Aggregate sales of urea have increased by 11 per cent to 9.75 lakh tonne during the year under review.
In September 2005, the board of directors of Indian Rayon and Industries, IGF and Birla Global Finance have approved the restructuring proposal for the mergers of Indo Gulf and Birla Global with Indian Rayon. Under the two separate restructuring schemes, Indian Rayon will issue to IGF shareholders one equity share of Indian Rayon for every three equity shares of Indo Gulf held. Indian Rayon will also issue to Birla Global Finance shareholders one equity share of Indian Rayon for every three equity shares of Birla Global Finance.
During 2004-05, IGF has introduced a new neem coated urea “Krishidev”. In the first year of its launch, the company has registered a sale of 1.75 lakh tonne. To enhance the productivity of farmlands, the company is developing products – zincated urea and sulphonated urea. The company has launched new initiatives in the areas of rain harvesting to conserve water, tap unconventional solar energy by installing solar heaters in its townships and increase the utilisation of treated effluent for horticulture.
IGF has posted an impressive performance for both quarters of 2005-06. During April-June 2005, the company has registered a 8.6 per cent rise in net sales to Rs 102.9 crore. Likewise, the net profit has risen by 17.5 per cent to Rs 9.4 crore. The sale of urea at 1.66 lakh metric tonnes during April-June 2005 has been higher by 17 per cent over the corresponding period in the previous year. For the quarter ended September 2005, despite a decline of 10 per cent in net sales to Rs 214 crore, net profit of the company has increased by 39 per cent to Rs 22.5 crore over the corresponding period of the previous year. The sale of urea for July-September 2005 has been marginally higher by 2.7 per cent at
3.48 lakh metric tonnes.
m GODFREY PHILLIPS INDIA
Healthy Bottom Line
G
Economic and Political Weekly January 7, 2006
year. Likewise, net profit has galloped by
| The Week’s Companies | (Rs lakh) manufacturing factories located in Ghaziabad (near Delhi) and in Andheri | ||||
|---|---|---|---|---|---|
| BPCL | Indo-Gulf | Godfrey Phillips (Mumbai) and a tobacco-buying unit in | |||
| Financial Indicators 2004-05 | 2003-04 | 2004-05 | 2003-04 | 2004-05 | 2003-04 Guntur (Andhra Pradesh). The most popular brands of the company are Red |
| Income/Appropriations | and White, Four Square, Jaisalmer, | ||||
| 1 Net sales 5896999 | 4825431 | 67835 | 57852 | 68296 | 62465 Cavanders, Tipper and Prince. GPI has |
| 2 Value of production 6055624 | 4797027 | 68418 | 57142 | 68177 | 63290 two major shareholders, one of India’s |
| 3 Other income 44529 | 43413 | 1838 | 2576 | 1345 | 1901 |
| 4 Total income 6100154 | 4840440 | 70256 | 59718 | 69522 | 65191 leading industrial houses – the K K Modi |
| Raw materials/stores and | group and one of the world’s largest to | ||||
| spares/power and fuel consumed 1379342 | 932766 | 47982 | 33827 | 16199 | 15872 bacco companies, Philip Morris. |
| 6 Other manufacturing expenses 4079793 | 3245685 | 2229 | 1701 | 10203 | 7814 During 2004-05, GPI has reported a |
| 7 Remuneration to employees 79309 | 66176 | 3996 | 3521 | 5691 | 4197 |
| 8 Other expenses 353801 | 268921 | 3864 | 3601 | 26829 | 28769 healthy financial performance. The |
| 9 Depreciation 59604 | 56116 | 3996 | 4039 | 1655 | 995 company’s net sales have stood at Rs 683 |
| Gross profit 148305 | 270777 | 8189 | 13029 | 8944 | 7544 crore – a rise of 9 per cent over 2003-04. |
| 11 Interest 13980 | 10497 | 141 | 165 | 572 | 556 Likewise, net profit has increased by |
| 12 Operating profit 134325 | 260280 | 8048 | 12864 | 8372 | 6988 22 per cent to Rs 63.6 crore. Earnings |
| 13 Non-operating surplus/deficit 1310 | 3272 | 199 | 28 | 1623 | 661 |
| 14 Profit before tax 135635 | 263551 | 8247 | 12892 | 9995 | 7649 per share has also surged to Rs 61 from |
| Tax provisions 39055 | 94095 | 2554 | 3865 | 3635 | 2431 Rs 50 in the previous year. During the |
| 16 Profit after tax 96580 | 169457 | 5693 | 9027 | 6360 | 5218 year under review, cigarettes sales have |
| 17 Dividends | registered a 2.7 per cent rise to 12,195 | ||||
| (includes tax on dist profit) 37500 | 52500 | 1263 | 1263 | 2288 | 1976 million cigarettes over the previous year. |
| 18 Retained profits 59080 | 116957 | 4430 | 7764 | 4072 | 3242 |
| Liabilities/assets | Overall sales, comprising cigarettes, | ||||
| 19 Paid-up capital 30000 | 30000 | 4509 | 4509 | 1040 | 1040 tobacco, cigar and tea, have increased |
| Reserves and surplus 608843 | 554972 | 55756 | 51506 | 31661 | 27910 by 10 per cent to Rs 1,296 crore over |
| 21 Long-term loan 352801 | 226051 | 66359 | 63194 | 304 | 654 2003-04. During the period under review, |
| 22 Short-term loan 35360 | 42921 | 1368 | 327 | 5920 | 1415 |
| (i) of which, bank borrowings 235460 | 28677 | 1368 | 327 | 5920 | 1415 cut tobacco exports have increased |
| 23 Gross fixed assets 1401739 | 1256575 | 89494 | 88462 | 20775 | 15045 significantly to Rs 3.3 crore, as against |
| 24 Accumulated depreciation 566872 | 511227 | 65807 | 61858 | 7855 | 6313 Rs 36 lakh in the previous year, due to |
| Inventories 625856 | 428602 | 5110 | 4497 | 12783 | 12488 major initiatives taken by the international |
| 26 Total assets/liabilities 2037774 | 1777195 | 75159 | 69738 | 53705 | 43053 division of the company to enhance ex- |
| Miscellaneous items | |||||
| 27 Excise duty 488701 | 519405 | 0 | 0 | 61274 | 55188 ports of cigarettes and cut tobacco. The |
| 28 Gross value added 254047 | 363431 | 14591 | 18197 | 21981 | 17737 company has introduced its cigarette |
| 29 Total foreign exchange earnings 194456 | 132044 | 0 | 0 | 7387 | 7236 brands in the Republic of Guinea and |
| Total foreign exchange outgo 742542 | 495267 | 340 | 245 | 5346 | 3978 Sierra Leone, and it has appointed |
| Key financial and performance ratios | experienced agents to popularise its | ||||
| 31 Turnover ratio (sales to total assets) 3.3 | 3.2 | 0.9 | 0.8 | 2.7 | 2.8 |
| 32 Gross value added to gross | brands. The export of un-manufactured | ||||
| fixed assets (%) 19.1 | 30.9 | 16.4 | 20.6 | 122.7 | 127.2 tobacco has surged by 35 per cent to |
| 33 Return on investment (gross profit | Rs 51.8 crore as compared to Rs 38.4 | ||||
| to total assets) (%) 7.8 | 16.1 | 11.3 | 18.8 | 18.5 | 18.1 crore in 2003-04. |
| 34 Gross profit to sales | |||||
| (gross margin) (%) 2.5 | 5.6 | 12.1 | 22.5 | 13.1 | 12.1 During 2004-05, GPI has set up a new |
| Operating profit to sales (%) 2.3 | 5.4 | 11.9 | 22.2 | 12.3 | 11.2 research and development plant at its |
| 36 Profit before tax to sales (%) 2.3 | 5.5 | 12.2 | 22.3 | 14.6 | 12.2 Andheri factory with the latest meas |
| 37 Tax provisions to profit before tax (%) 28.8 | 35.7 | 31.0 | 30.0 | 36.4 | 31.8 uring and monitoring laboratory equip |
| 38 Profit after tax to net worth | ment. During the current year the | ||||
| (return on equity) (%) 15.8 | 32.0 | 9.8 | 17.3 | 20.6 | 19.0 |
| 39 Dividend (%) 107.7 | 152.6 | 24.0 | 24.4 | 189.1 | 165.2 company has test launched its new |
| Earnings per share (Rs) 32.2 | 56.5 | 12.6 | 20.0 | 61.2 | 50.2 cigarette brand “Force 10” in Nagpur and |
| 41 Book value per share (Rs) 212.9 | 195.0 | 133.6 | 124.2 | 314.5 | 278.4 Ludhiana. |
| 42 P/E ratio (multiple) 10.3 | 8.3 | 7.2 | 2.3 | 13.2 | 9.0 For April-June 2005, GPI’s net sales |
| 43 Debt-equity ratio | have risen by just 0.7 per cent to Rs 165.7 | ||||
| (adjusted for revaluation) 0.61 | 0.46 | 1.12 | 1.13 | 0.19 | 0.07 |
| 44 Short-term bank borrowings | crore. Net profit has increased by 12.7 | ||||
| to inventories (%) 37.6 | 6.7 | 26.8 | 7.3 | 46.3 | 11.3 per cent to Rs 15.7 crore. Cigarette sales |
| Sundry creditors to sundry | have been higher by 12 per cent at | ||||
| debtors (%) 556.1 | 461.6 | 26.6 | 28.2 | 4781.8 | 788.6 Rs 329 crore over April-June 2004. Sales |
| 46 Total remuneration to employees | of domestic tea have risen by 2 per | ||||
| to value added (%) 31.2 | 18.2 | 27.4 | 19.3 | 25.9 | 23.7 |
| 47 Total remunerations to employees 1.3 | 1.4 | 5.8 | 6.2 | 8.3 | 6.6 cent to Rs 8 crore. For the quarter ended |
| to value of production (%) | September 2005, GPI’s net sales have | ||||
| 48 Gross fixed assets formation | risen by 3 per cent to Rs 169 crore over | ||||
| (% growth) 11.6 | 15.0 | 1.2 | 0.5 | 38.1 | 17.1 the corresponding period of the previous |
| 49 Growth in inventories (%) 46.0 | -2.7 | 13.6 | 4.6 | 2.4 | 20.6 |
Note: P/E multiples are the latest with corresponding last year’s figures. 97 per cent to Rs 23.4 crore.
m Economic and Political Weekly January 7, 2006
