Kanthal India

Kanthal India made headlines in February 1998, when Kanthal AB of Sweden (a subsidiary of Sandvik AB) made an open offer to increase its stake to 74 per cent from 51.54 per cent. The offer was made at a price of Rs 32 against the prevailing price of Rs 20, but received poor response, and the foreign parent's stake increased to only 57.43 per cent. Lack of interest in the open offer was probably due to expectations of a higher offer price, as the market price rose rapidly to about Rs 30.

The open offer was to enable the parent to take firm control over the subsidiary's operations. Kanthal India's performance has been affected by stiff competition and cost escalation.Exports turnover, too, was sluggish. The company makes high resistance electrical strips, wires, and ribbons, and thermostatic bi metal strips.

Despite the insipid performance in the past, optimism stems from the fact that the parent plans to make the company a sourcing base for its Asian operations. It had financed the expansion of production facilities to set up a new wire-drawing unit with sophisticated technology from the parent company. The plant, which has seen its fixed assets base increase to Rs 6.55 crore in 1997-98 from Rs 2.61 crore, will contribute to sales growth in the current year. While profits have fallen in 1997-98 at the net level, Kanthal's working capital management has seen a substantial improvement, improving its cash generation. This will help it in the current year as it will require funds for the new operations.