The Hindu Business Line : Aditya Birla Nuvo consolidated Q1 net drops 130%

Mumbai, Aug 4 Diversified conglomerate Aditya Birla Nuvo reported a 130 per cent dip in its consolidated net profit for the quarter ended June 30, 2008, mostly on account of higher losses in its life insurance business and investments in its BPO and garment retail businesses.

The company reported a consolidated net loss of Rs 28.3 crore during the quarter, as against a profit of Rs 94.7 crore in the corresponding period last fiscal.

Its life insurance business reported a net loss of Rs 146.8 crore during the quarter from Rs 33.6 crore in the year-ago period, which was largely due to the growing share of new business premium. “The new business is fully profitable – however, income from it will accrue over the policy period, as is the case with the nature of this business. Higher spends on intensification of distribution network also affected profitability,” the company said.

BPO biz hit

In the BPO business, the net loss was higher at Rs 23.6 crore during the quarter (Rs 7.9 crore). While a weak US dollar against the Canadian dollar and high manpower costs constrained profitability in the North America region, profitability in the Asia Pacific region was lowered by higher interest costs.

Expensive retail

In the retail business, the pre-launch expenses of stores in apparel retail subsidiaries and higher lease rentals in the branded garments business, coupled with higher discounts to maintain its competitive edge, impacted the bottom-line.

Telecom too falls

In the telecom business, net profit was lower by 15 per cent at Rs 263 crore (Rs 308 crore). The expiry of concessional license fees in seven operating circles, lower foreign exchange gain and higher deferred tax impacted the bottomline. The company’s consolidated revenues, however, were up by 48 per cent to Rs 3,228 crore (Rs 2,184 crore). Revenues from its subsidiaries and joint ventures grew by 53 per cent to Rs 2,149 crore.

Standalone results

On a standalone basis, the company reported a 23 per cent rise in net profit during the quarter at Rs 41.6 crore (Rs 33.7 crore), while net income was Rs 1,078 crore (Rs 780 crore), up by 38 per cent.