It was a bad year for petrochemical and fertiliser industries and this was partly responsible for the decline in the company's growth. Turnover rose just 4.1 per cent to Rs 1,927.65 crore against a growth of 10.7 per cent in 1995-96.
GSFC had to stop production at its Nylon 6 plant due to a fire in November 1996. The nylon filament yarn which GSFC produces had to face a slowdown due to glut in the (end-user) tyre industry. GSFC also had to face a problem of high raw material costs, especially Benzene.
However, the company could control its interest burden, which rose marginally from Rs 131.70 crore to Rs 132.53 crore. Depreciation, too, went up a tad by 2.8 per cent to Rs 66.51 crore.
The increase in equity due to a 1:5 rights issue in July 1996 at a premium of Rs 90 further reduced the EPS. The equity went up by Rs 13.30 crore to Rs 69.81 crore. This issue was to part finance the ammonia project with a capacity of 1,350 tpd.
This plant is expected to be commissioned in the third quarter of 1997. Hence there will be an increase in depreciation for the current year. Analysts view that the earnings for 1997-98 will be at the same levels despite an increase in sales.
The current market price of Rs 88.50 discounts earnings around 3 times. This low discounting is due to the company's diversified nature of business.
