Hindustan Inks

Also, during the year, its profit margins at all levels declined sharply. Its operating profit margin declined to 19.86 per cent from 26.50 per cent in the previous year. Its gross profit margin declined to 11.35 per cent from 19.85 per cent in 1995-96. This decline in gross profit margin is attributed to 62.19 per cent rise in interest cost to Rs 7.38 crore. Higher depreciation charges of 25.32 per cent contributed to the fall in net profit margins to 9.61 per cent from 17.05 per cent in the previous year.

But things are not all that gloomy for the company. HIRL has been one of the major beneficiaries from the new excise duty changes in the recent budget which slashed the excise duty on printing inks to zero from the earlier level of 20 per cent. Analysts point that this would translate into a saving of around Rs 10 crore for the company. HIRL has a presence in the printing inks, synthetic resins, industrial adhesives and wire enamels segment and a market share of around 20 per cent. Also, with the company shifting substantial part of its manufacturing operations at Daman, it enjoys a tax holiday and is also exempt from MAT. However, the EPS was further affected by the increase in equity from Rs 3.93 crore to Rs 4.6 crore due to allotment of shares to the promoters against warrants at a price of Rs 89.69 per share.

 

The scrip has declined by 20 per cent in the last 10 days from Rs 100 to the current level of Rs 80. The stock, which always has a discounting of less than four, may not see any improvement in its valuations.