Grind Pays For Grindwell
Sales increased by 18.71 per cent to Rs 183.3 crore.
The increased turnover has mainly come from the new plant of non-woven abrasives at Bangalore commissioned in March 1996.
This also led to a marginal increase in depreciation by 26.6 per cent to Rs 3.8 crore.
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Other income also increased by 55.2 per cent to Rs 5.6 crore contributing 33.73 per cent to profit before tax (PBT).
Despite tight liquidity prevailing in the market, the company could reduce the interest burden by 16.88 per cent to Rs 6.4 crore. The company could have reduced its dependence on high cost debt from the funds generated through the issue of preferential shares to its parent, Saint Gobain.
The latter has increased its stake in Grindwell Norton to 51 per cent at a price of Rs 248.75 per share.
The bottomline would have been still better had not the tax liability increased by a whopping 152 per cent to Rs 6.3 crore.
Tax has been paid at an effective rate of 33.87 per cent as against 19.68 per cent in the previous year.
However, despite a rise in net profit, the earnings per share has shown a decline because of the increase in equity due to the 1:1 bonus issue and preferential allotment to Saint Gobain.
The stock of Grindwell has been moving in a narrow range between Rs 150-175.
The stock has not witnessed much of buying interest mainly because of poor sentiment due to the doubts about the company going in for joint venture to manufacture float glass.