Samtel Q4 FY2006 Gross Revenues at Rs 1994 million, FY2006 Gross Revenues at Rs 8964 million

New Delhi, Delhi, India , 2006-05-05

CPT realisation trends and raw material prices normalise during Q4 FY2006

Abnormally steep decline in CPT prices accelerates global industry restructuring

-- Uncompetitive capacities shutting down
-- Leading to more balanced demand-supply scenario

Growth outlook driven by:

-- Initiatives aimed at increasing average selling price
-- Continued robustness in CPT demand
-- Combined benefits of Lines 4 and 5, expected to reflect in FY07

Samtel Color Limited (Samtel), the largest integrated manufacturer of Colour Picture Tubes (CPT) for television sets in India, today announced its results for Q4 FY2006 and FY2006.

Commenting on the performance, Mr. Satish Kaura, Chairman and Managing Director, Samtel Color Limited, said:

“For most of FY2006, the CPT industry was subjected to serious price challenges. We are one of the few players in this sector globally who remain cash earnings positive despite such a tough operating environment. We have also been able to sequentially reduce our bill-of-material to sales ratio, which demonstrates our fundamental strengths as the country’s largest and most innovative picture tube manufacturer.

The impact of the unusually rapid price erosion in the global markets is compelling high-cost players to exit the sector, depleting surplus capacities and creating export opportunities for players like Samtel Color. The business situation is stabilising and the outlook for the next year is encouraging. We are leveraging our manufacturing and technological capabilities to introduce new products, phase out older ones, increase realisations, and reduce expenses. This, combined with our new lines making commercial contributions in FY2007, will further augment our performance.”

Q4 & FY2006 results overview

The Company has reported revenues of Rs 1994 million and a sales volume of 14 million units for Q4 FY2006. The challenging business environment, which existed during the first three quarters of FY2006, showed clear signs of improvement in the quarter under review, with CPT price trends normalising and raw material prices aligning to the changed market environment.

Resultantly, PBIDT for Q4 FY2006 was better on a sequential basis at Rs. 212 million, although it declined compared to the corresponding period last year. Operating margins were maintained at 12.3%. The Company reported a cash profit of Rs. 113 million and net profit after taxes for the quarter at Rs. 10 million.

Revenues for the full year FY2006 were at Rs. 8964 million. PBIDT reduced to Rs. 852 million and PAT declined to Rs. 8 million, reflecting the impact of the above-mentioned challenging business environment and adverse forex movements in the third quarter of the year under review. Cash Profit for the year was Rs. 492 million.

Sector update

Earlier in the fiscal year under review, inventory liquidation and stock reductions by some global CPT manufacturers had resulted in the downward adjustment of CPT prices in the international markets at an accelerated pace, resulting in about 18%-20% reduction in average selling prices in a span of less than 12 months. The normal rate of decline for a specific product is about 6% every year.

The worldwide CPT sector, which was already witnessing a distinct shift as manufacturing began moving to more cost competitive locations, is now undergoing a restructuring in a much more pronounced manner. This restructuring, triggered by the significant decline in global CPT prices, is resulting in uncompetitive capacities exiting the industry. Over the past few months, capacities totalling to about 26 million units have already ceased operations in high cost locations.

The ongoing changes in the global CPT sector are having a visible impact on the demand and supply scenario, which has become relatively more balanced. The depletion of capacities, especially in the Western markets, is also creating export opportunities for high quality cost-competitive players like Samtel that have managed to remain cash earnings positive despite very difficult operating conditions.

Realizations in the domestic market were relatively better during the year, although CPT prices did witness some downward pressure due to the significant price drop in the international markets and slower than anticipated growth of domestic TV demand which stood at about 7% for FY2006.

Demand outlook in the domestic market, however, remains robust and is expected to grow in line with GDP. Consumer preferences in the domestic market are exhibiting a clear shift in favour of higher-end large and flat picture tubes, where Samtel Color is the market leader and, in the case of 21-inch true flat and 29-inch flat CPTs, the only manufacturer.

Note: All references in this note to EPS and CEPS estimates complete dilution of warrants issued to promoters, resulting in an equity capital of Rs. 488 million or 48.80 million equity shares of Rs. 10 paid up.

About Samtel Color Limited

Samtel Color Limited is the flagship company of the Rs 12.5 billion Samtel Group. The Company manufactures Colour TV picture tubes. The Company has a market share of around 36% in the domestic market and is supplying picture tubes to all the major domestic TV manufacturers including multinationals. The Company is also the largest manufacturer of 21” Pure Flat Tubes and the only manufacturer of 29” super flat tubes in India.

The Samtel Group is India’s largest integrated manufacturer of a wide range of display devices like colour and monochrome TV picture tubes, tubes for avionics, medical and industrial applications and their components including CRT glass, electron guns, heaters, cathodes and deflection yokes. It has nine factories and employs over 5000 people.

For further information on the Company, its products and services please log on to www.samtelgroup.com

Certain statements in this document may be forward-looking statements. These include statements about such matters as future production and sales of our products, products that incorporate our products or that are produced using our products, future prices and sales of and demand for our products, future operational and financial performance, strategic plans, and impacts of regional and global economic conditions. Such forward-looking statements are subject to certain risks and uncertainties like government actions, local political or economic developments, technological risks, dependence on certain customers and other factors that could cause our actual results to differ materially from those contemplated by the relevant forward looking statements. Samtel Color Limited undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.
Contact

Ravindra Saksena , Samtel Color Ltd, +91 (011) 2684 2791/ 2691 8409
[email protected]