Indian Dyestuff Industries

Lack of demand for the companys products, both in the domestic as well as international markets, resulted in substantial under utilisation of capacities. It also resulted in erosion of profit margins during the six months to September 1996. Net sales declined by 4.22 per cent to Rs 150.85 crore from Rs 157.49 crore earlier, while gross profit declined by 82.5 per cent to Rs 1.05 crore. With depreciation claiming Rs 4.45 crore against Rs 3.69 crore in the year before, the company was in the red with net loss amounting to Rs 3.40 crore. Stiff competition in disperse dyes and lower custom duties brought down the margins of the company. The high finance cost due to the liquidity crunch also aggravated the situation. The management expects local sales and exports to improve in the second half of 1997. The company will avail technical know-how from Ciba Geigy of Switzerland through a joint venture for upgrading the quality. It also plans to improve the capacity utilisation of its pigment plant which will start operating from January 1997.

 

Market price: Rs 15.50, 52-week high/low - Rs 31/10

SAFARI INDUSTRIES

Second-half results shine

With encouraging results during the six months to September 1996, the companys share turned bullish and scaled a 52-week high of Rs 23.75 on January 7, 1997 from the 52-week low of Rs 9 on September 18, 1996. This positive growth in the companys shares is attributed to its healthy performance in the first half of 1996-97. During the period, sales rose by a hefty 70 per cent to Rs 22.27 crore. While it had made a gross loss of Rs 0.32 crore in the first half of 1995-96, the company turned the corner with a gross profit of Rs 1.43 crore. Net profit at Rs 0.74 crore also looks healthy compared to the net loss of Rs 0.72 crore in the previous half. Another positive factor has been the sales projection of Rs 50 crore for the year ending March 1997. The company is now planning to increase the production capacity to 12 lakh pieces from the existing capacity of 10 lakh pieces.

Market price Rs 23.75, EPS: Rs 5.72 (annualised), P/E: 3.28

VAM ORGANIC CHEMICALS

Profits under pressure

A decline in the procurement rate of molasses and substantial increase in the installed capacity of acetic acid has affected sales realisation of the company during the six months to September 1996. Further, softening of the international price for vinyl acetate monomer (VAM) may further affect the profitability of the company in the second half as the price of VAM in India is likely to witness a declining trend. The only silver lining is that the company may not face any problem on the raw-material front as sugarcane production in the country is expected to be good in the coming year. During the first six months of the present year, sales moved up marginally by 3.8 per cent to Rs 137.77 crore from Rs 132.69 crore in the previous first half. Owing to lower price realisation, gross profit declined by 7.1 per cent to Rs 15.12 crore. Taxation claimed 86 per cent more to Rs 3.25 crore and because of this the net profit declined by 32.5 per cent to Rs 5.92 crore. In the present year, the company is examining plans for expansion and new business proposals. To avoid major operational bottlenecks due to frequent incidence of power failure and fluctuations, the company proposes to install an additional turbine generator with a capacity of 5.5 MW. In view of good demand for pyridine and picolines, the company is planning to increase the capacity to 4000 MT. The domestic demand for these products is around 2150 MT against the present installed capacity of only around 500 MT. It also plans to manufacture tri ethyl phosphate, which is presently imported. Besides, the company has signed a collaboration with Kemira Coating of the United Kingdom to manufacture wood finishes, a polymer based product with good market potential.

Market price: Rs 186, EPS Rs: 33.80, P/E: 5.50