In Cruise Mode
THE COPMASS
Motor Industries Corporation's (Mico) ability to expand its product profile has not only enabled it to ride out the recession in the automobile industry but also make the most of the recovery in the sector. The auto ancillary has posted a 24 per cent increase in sales to Rs 411.55 crore and a 55.5 per cent increase in net profit to Rs 22.58 crore. Thus, it has managed to weather the increase in competition, as in the 1999 annual report, it talks about additional players entering the replacement market. It has expanded its number of outlets in this segment widening distribution reach. Reacting to the changing market requirements the company has introduced Euro I fuel injection equipment and also started work on Euro II projects.
In fact, fuel injection equipment has become the main growth driver, with sales increasing by 12.5 per cent to Rs 576.11 crore while sales of injectors, nozzles and nozzle holders increased by 23.4 per cent to Rs 291.7 crore. Auto electricals' sales doubled to Rs 61.4 crore and that of portable electric tools increased by 20.7 per cent to Rs 29.17 crore.
Its Nashik plant introduced injectors which meet Euro I standards and is exporting certain products to the parent company. The new plant at Jaipur was inaugurated in March 1999 but the full benefits of this plant will be visible in the current year, as is evident from its first quarter results. It has also doubled production of alternators and starter motors at the Nanganathapura plant.
As a result, sales has increased by 16 per cent to Rs 1509.98 crore in 1999 and a tight leash over costs enabled it to increase its operating profit margin to 15.1 per cent from 14.2 per cent in the previous year. However, its efforts to increase its reach in the after market and expanded product range resulted in an increase in debtors and inventory. Still, it managed to increase cash generated from operations by 22 per cent to Rs 289.86 crore.
The current year continues to see good growth in the sale of automobiles and this augurs well for Mico. Another area of possible improvement could be the exports market as it has executed an export order from its Jaipur plant and more such orders will boost its top line growth.
Kodak India
Kodak India's performance in 1999 and in the current year continues to be excellent. In the first quarter of 2000, the company has posted a 19 per cent increase in sales to Rs 170.4 crore and a 456 per cent increase in net profit to Rs 12.07 crore. That is good news for its shareholders who subscribed to the rights offer at Rs 175 in July 1999 as the share trades at about Rs 500 at present. The direct fallout of the issue was that it managed to lower its debt burden substantially, with its debt to equity ratio falling to 0.12:1 from 0.89:1 in the previous year.
While it had set out a substantial portion of the Rs 73.4 crore rights issue proceeds towards its financing requirements, a substantial portion of the balance funds are also being used to fund working capital pending deployment. The company will be deploying these funds in augmenting capacity over two years, depending on business requirements. In 1999, its capacity to make films has been increased by 36 per cent to 5.06 sq. metres while chemicals' capacity has doubled to 36 million litres.
Its working capital management has improved substantially over 1998, when it had experienced a high level of inventory. In 1999, apart from a significant improvement in its profitability it lowered inventory and kept debtors growth minimal. Cash generated from operations during 1999 was Rs 85.02 crore against a negative Rs 29.86 crore in the previous year.
Revathi-CP Equipment
Difficult times can bring out the best in some companies. Revathi CP which makes mining and drilling equipment used mainly in the coal mining industry has been facing a decline in its fortunes. Its 1999 annual report shows that it has improved its working capital management and is also developing new products which will expand its market. Though top line growth will take some time, its efforts will minimise the adverse impact and strengthen its balance sheet.
Revathi CP's operating profit was lower compared to last year but effective working capital management enabled it to increase net cash generated from operations to Rs 18.75 crore from Rs 7.93 crore in the previous year. It has actively deployed its surpluses in treasury investments, most of them in mutual funds. This has generated a substantial income in the form of dividends but the company must be worried now with the slide in the markets affecting the NAV of its funds.
The company plans to capitalise on the parent company's global network to improve its performance. It is developing a new product in a pneumatic Trac Drill for the export market. Once these products are successfully launched in the export market, there could be some improvement in its performance.