Bonus Cheer From Indian Rayon

Improved performance is attributed to all-round growth in the company. Production of VFY hit an all-time high of 13803 mt. In order to improve its operations in the rayon division, the company has integrated backwards to produce caustic soda with an installed capacity of 33000 mt. The company has also cushioned itself from power problems by commissioning a 16.5 mw co-generation thermal power plant.

The cement division also contributed substantially to the growth. The grey cement division increased its production by 24 per cent to 39.3 lakh tonnes. Production at the white cement plant also increased considerably with the commissioning of the second unit of 2.1 lakh tonne capacity, thereby taking the total capacity to 3.6 lakh tonnes.

 

The textile, carbon black and insulator divisions performed up to expectations. The carbon black division had a good year and reached its peak production level of 52,209 tonnes. The company further plans to raise the capacity to 95,000 tonnes. The insulator division had a growth of 74 per cent and this division is the worlds third largest insulator production facility.

During the year, the company commissioned various projects with a total outlay of Rs 692 crore. The performance of these projects will be reflected in 1997-98.

One of the important investment for the current year is the Rs 341 crore sea water magnesia plant. This product is a 100 per cent substitution project and may result in a forex saving of Rs 120 crore.

The company is very optimistic about the future earnings because, it expects the impact of new plants will be felt in the current year. Perhaps it is this optimism, as also hefty reserves on its books, that has led the company to consider issuing bonus shares.

The scrip has already reacted to this announcement and touched its circuit breaker level at Rs 396. The scrip may witness further buying interest in the coming few days. The stock discounts the current earnings by 8 times.