Corporate Notes

Improved results

A major player in asbestos cement products, the company improved its profit margins in the first half of 1996-97. The operating profit margins at 28.3 per cent (27.3 per cent) and gross profit margins at 22.5 per cent (21.7 per cent) indicate an improvement over the previous half. During the six months to September, sales income rose by 18.7 per cent to Rs 22 crore (Rs 18 crore). Gross profits increased by 23.2 per cent to Rs 4.94 crore, while net profit rose by 20.2 per cent to Rs 3.9 crore. The companys project to manufacture 45,000 tonnes per annum of asbestos cement sheets commenced production last month. With the implementation of the project, the manufacturing capacity of asbestos cement sheets has increased to 90,000 tpa. The company is optimistic about the growth in volumes due to a proportionate increase in capacity.

 

Market price: Rs 36.75, EPS: Rs 11.47, P/E: 3.2

DYNAMIC MICROSTEPPERS

Technical hitches dampen performance

A major breakdown in the stepper motor carrier, a critical component in production of stepper motors, halted the companys growth during the first half of 1996-97. The company expects satisfactory results in the second half as the stepper motor carrier was made operational in October 1996. The company manufactures stepper motors - a component of quartz timing movement for wall clocks and time pieces. During the first half of the current year, its sales declined by 60.7 per cent to Rs 1.42 crore (Rs 3.61 crore). Lower turnover resulted in gross loss of Rs 0.40 crore and net loss of Rs 0.55 crore. This affected the market price of the company, which is at present ruling around Rs 13.50 on the Bombay Stock Exchange. The company made a public issue in October 1995 pricing the shares at Rs 30 to part finance the new unit at Silvassa to manufacture quartz timing movements. This indicates that the investment of the original subscriber to the public issue has depreciated by almost 55 per cent. A closer look at the companys projection for 1996-97 reveals that the sales target of Rs 19.07 crore and net profit of Rs 2.55 crore for the year ending March 1997 may not be achieved. This is substantiated by the fact that the operations of the companys new unit at Silvassa are at an uncertain stage due to the extension of trial runs on high-tech injection moulds.

Market price: Rs 13.50, PE: -3.59, 52-week high/low: Rs 32/10

ABHISHEK INDUSTRIES

Gross profits shoot up

The company, belonging to the Trident group, has done well during the year ended December 1996. Though sales income of the company at Rs 60.97 crore has gone up marginally by 4.5 per cent on an annualised basis, profits and profit margins have improved smartly when compared to the previous year. Gross profits shot up by 145 per cent to Rs 8.86 crore from Rs 2.71 crore for the nine months ended December 1995. Net profit at Rs 4.52 crore was up from Rs 2 lakh for the previous year. The gross profits margin for the year was up 14.5 per cent from 6.2 per cent earlier and shows operational efficiency of the company. During the year, the company completed its expansion scheme by raising the spindles capacity to 32,400 spindles from 25,344 spindles as on December 1995. It proposes to set up another spinning mill to increase the capacity to 43,392 spindles to manufacture cotton yarn, cotton melange yarn and acrylic yarn at a capital outlay of Rs 91 crore. The board of directors of the company have recommended an equity dividend of 10 per cent for the year ended December 1996. Surprisingly, the market price of Abhishek Industries is hovering around Rs 6.25 on the Bombay Stock Exchange. The company has a book value of Rs 12.02. The current cash earning per share of the company works out to Rs 5.25, while the net earning per share stands at Rs 2.68. If this share is picked up at the present rate, the dividend yield on the investment of Rs 6.25 per share would be almost 16 per cent.

Market price: Rs 6.25, EPS Rs 2.68, P/E 2.33