ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Take-over Blues

Take-over Blues Hansavivek KEC INTERNATIONAL, formerly Kamani Engineering Corporation, proposes to further diversify its activities. It has applied to the Central government for grant of an industrial licence for manufacture of specialised varieties of cement. The directors are also considering proposals for the manufacture of electrical motors, generators, certain items of petrochemicals, etc The company has suffered a setback in its working during 1983-84 with gross profit falling from previous year's Rs 6.42 crore to Rs 4.18 crore despite increase in turnover from Rs 62.12 crore to Rs 68.83 crore. These figures reflect a severe pressure on profit margins. Net profit has tumbled from Rs 3.04 crore to Rs 1.19 crore. The directors have recommended an equity dividend of 12.5 per cent on the capital enlarged by a one-for-one bonus issue, which works out to 25 per cent on old capital as against 20 per cent paid last year. Dividend cover has thinned-down to 3.08 times from 10.07 times previously. The company secured during the year orders of the value of Rs 13.20 crore for supply and construction of transmission line towers and line material, both for local and overseas markets. For the local market, the total number of tenders decided were lower in value than in the previous year. Severe competition continued in the overseas markets due to the impact of recession. Competition in the indigenous market is also becoming tough with a number of new parties having come in the field. The company has almost completed its work in Iran and is trying to get a further supply order of the value of Rs 4.82 crore. For the turnkey job of 220 KV DC Bundle Conductor Line in Libya, a letter of credit has recently been established by the clients. In Thailand, the turnkey job of 230 KV-163 kms line has been completed, but in view of the difficult terrain and other circumstances, it has resulted in a loss. In respect of work done in Iran under the contractual obligations, a part payment is received from Iranian authorities in foreign currency and balance payment continues to be received in Iranian currency. The surpluses arising out of the work done for which payments are made in Iranian currency are lying as deposits with the various banks in Iran. Applications for permission to remit these funds have been made and are being considered by the Government of Iran.

Pricing Policy the Hurdle

Pricing Policy the Hurdle Hansavivek HINDUSTAN ALUMINIUM CORPORATION (HINDALCO) expects to complete facilities for achieving a production of 1.5 lakh tonnes of aluminium by the first quarter of 1986, by which time it will be self-sufficient in production of alumina too. Foreign collaborations are being entered into to enable the company reduce energy costs by almost 15 per cent. The modernisation of the entire plant will entail considerable expenditure which the company expects to meet from internal generation and long-term credits from financial institutions, either by way of loans or by way of non-convertible debentures. The company's wholly-owned subsidiary, Renusagar Power Company, has plans afoot to set up another power generating set with a capacity of 68 MW, pushing the total capacity to about 240 MW. With the commissioning of the fifth set, Hindalco will be self-sufficient in its power requirements. Meanwhile, the management has planned proper over hauling schedules to maintain these units in a healthy state. On account of continuous operation over the years, these generators need frequent and extensive maintenance.

Into High Technology

Into High Technology Hansavivek BLUE STAR is seeking letters of intent to manufacture several high technology products including electronic measuring and control digital distribution systems along with peripherals and field modules, electronic weigh sensors, indicators and systems, electronic private automatic branch exchangers (EPABX). Meanwhile, the company is implementing projects for the manufacture of centrifugal packaged chillers and air handling units for air- conditioning and refrigeration applications. New machinery is being installed at the Thane works which will modernise the plant and significantly improve the efficiency and quality of production.

Hard Pressed by Rising Costs

Hard Pressed by Rising Costs Hansavivek RALLIS INDIA has compiled accounts for the nine months ended May 1984 without incorporating the operating results of Protein Products of India (PPI), a subsidiary proposed to be amalgamated with the company with effect from September 1, 1983. On completion of the legal formalities for amalgamation, those shareholders-of PPI, who opt for the com pany's shares in lieu of their holding in PPI will be entitled to the dividend declared by the company commencing from September 1, 1983. In view of the delay in completion of the legal formalities, the directors had decided to pay an interim dividend of 11 per cent. No final dividend has been recommended. The company has earned during 1983-84 a gross profit of Rs 2.17 crore against Rs 5.24 crore in the previous year following sales of Rs 118.12 crore against Rs 178.75 crore. These figures show a marked contraction of pro fit margins. Net profit is Rs 89 lakh (Rs 211 lakh). The distribution is covered 1.43 times by earnings as against 2.93 times previously. The company sold its chemicals factory at Magarwara on March 1, 1984 as a going concern to Jay Shree Tea and Industries at a slump price of Rs 295 lakh. The company also disposed of its shareholding in Searle (India) in compliance with the condition laid down by the Central government in the letter of intent granted to it for the manufacture of Fenvalerate. The company proposes to extend the maturity period of the 7

Rise in R and D

touching Brahmins, Rajputs and tribals. We treat sensitive political appointments, like those of Governors, as if they were perks for distribution by the PM. As far as one can make out, only certain senior police officers (superseded because of their involvement in cases against Indira Gandhi and Sanjay!) have been resorted to seniority, even to positions of power. This development will be interpreted in a variety of ways unless a new pattern of probity emerges at various levels.

Wide-Ranging Diversification

Wide-Ranging Diversification Hansavivek SHAW WALLACE AND COMPANY is further diversifying its activities. It has obtained a letter of intent for establishing a white cement plant in HP. Detailed testing of the quality of limestone deposits is in progress. The company has also got a letter of intent for the manufacture of gypsum boards, blocks, tiles, etc. Mean- while, purity and yield of the company's organo-phosphorus pesticides have stabilised and market acceptance of products continues to be encouraging. The company has completed the second stage of expansion of the sulphuric acid plant and the unit has settled down to a satisfactory level of profitability. The new pricing for mula for superphosphates announced by the Central government which came into effect from April 1984 has enabled the unit to earn reasonable profits. An export- The Week s Companies oriented unit is being established under a newly formed company with foreign collaboration with the object of exporting software and computer consultancy. The company set up a synthetic detergents factory in Fatehpur, a no-industry district of UP within 3

Market Constraint

Market Constraint Hansavivek SIEMENS INDIA has suffered a sharp setback in its performance during 1983-84 forcing the directors to slash dividend by four points to 14 per cent. Gross profit has tumbled from previous year's Rs 27.17 crore to Rs 14.69 crore following a comparatively modest decline in turnover from Rs 143.76 crore to Rs 138:99 crore. Although tax liability is much lower, the net profit is halved to Rs 5.23 crore (Rs 10,49 crore) and earnings cover for the reduced dividend has thinned down to 3.46 times from 5.41 times previously. This outcome is attributed to sluggish market conditions with pressure on margins and cost increases in all inputs of production. Orders carried forward at the year-end stood at Rs 98.7 crore, about 10 per cent lower than the level of at the beginning of the year. The company was able to achieve an export turnover of Rs 14.9 crore despite a much reduced volume of business from USSR. Fresh inroads were made in the field of project work abroad with a repeat order for a 70 kV substation from Indonesia and a first-ever order from Aden for a substation worth Rs 60 lakh. Power Engineering Division, which has largely contributed to the company's growth over several years in the past, had a difficult time, with the order inflow having been affected due to the generally recessionary conditions in the industry and postponement of several large projects. The products particularly affected were switchboards and motors, which had to contend with severe competition at the market place. Execution of ongoing projects, however, has progressed well. The management proposes to ensure growth for this division by updating the existing products as well as by entering into more sophisticated areas of control and automation systems. The company has already commenced production of programmable control systems. It has also developed a range of thyristonsed force-commutated AC drives, which have hitherto been imported by the synthetic fibre industry. These are to be produced this year. The company has introduced a new series of switchgear and motors to cater to the changing needs of the Indian industry. In the Medical Engineering Division, the company's endeavour is to modernise the existing product range to meet the market requirement. The company has plans to enter into the electromedicine market in the next two years and for this purpose it has already received letters of intent for the manufacture of ultrasound diagnostic, patient monitoring and electrocardiograph units. In the field of advanced technology, particularly in computerised tomography and diagnostic equipment, the company has successfully installed sophisticated units manufactured by us principals, Siemens of West Germany, in various major hospitals in the country. The Components Data and Communications Division did well, despite entry of new firms in the field of railway signalling. It has introduced three phase point machines and AC immunised relays, for which orders are now being received.

Impressive Showing despite Recession

Impressive Showing despite Recession Hansavivek LARSEN AND TOUBRO has turned in impressive working results for 1983-84 in spite of work disruptions at its factories in Orissa, Karnataka and Maharashtra entailing production loss of over Rs 23 crore. Sales, profits as well as margins have all been better. The company has earned a gross profit of Rs 46.76 crore against Rs 36.81 crore in the previous year following rise in income from sales, construction and related activity, freight and charter hire, commission, etc, from Rs 298 crore to Rs 332 crore. With provisions for depreciation and taxation requiring more, the gap has been narrowed and net profit is Rs 23.28 crore against Rs 21.66 crore. Total dividend is stepped up by two points to 24 per cent on the capital enlarged by allotment of 26,42,141 equity shares to financial institutions and holders of convertible debentures. The enhanced distribution is covered 3.84 times by earnings as against 4.08 times previously. The reces sion in the electrical industry continued and in spite of fierce competition, the company was able to maintain its strong position in the market. For the first time, it booked orders from the cement industry for energy saving Atox vertical roller mills and pulse energised electro-filters for air pollution control. The company also received orders for several cement plants and hydraulic excavators and a large contract from NALCO covering civil, mechanical and electrical work at its plant at Damanjodi in Orissa. The company secured a major order for boiler steel structures for two units of 500 MW thermal power plant from NTPC and two new orders for railway electrification covering 915 track kms. It also supplied purification towers of multiwall construction for the Heavy Water Project at Thai and the First charge chrome plant for Fcrro Alloys Corporation. It delivered the first jack car and telescopic hoist for the Bokaro Steel Plant for changing refractory lining of L D Converters and installed fabricated Tuyere stocks manufactured to the design of Steinfuerter, West Germany, in one of the blast furnaces at the Bhilai Steel Plant. The production and tooling facilities for switchgear factories at Ahmednagar and Faridabad were expanded further during the year. A new facility to produce high quality flat leaf springs was commissioned at the Madh works. A computerised printed circuit board testing facility has been installed at. the Powai switchgear factory. The Awarpur cement works produced 5.45 lakh tonnes of cement during the year. Production has now fully stabilised. Mechanical erection contracts for oil and gas projects, undertaken on a joint venture basis in Kuwait with Consolidated Contractors International Company, have also been almost completed.

Hampered by Price Control

Hampered by Price Control Hansavivek BALLARPUR INDUSTRIES (BILT) has suffered a setback during 1983-84 with a drop in gross profit from the previous year's Rs 19.01 crore to Rs 15.72 crore, even though turnover increased from Rs 197.27 crore to Rs 212,68 crore. There is saving in taxation but with depreciation claiming more, net profit is halved to Rs 4.02 crore (Rs 8.09 crore). Dividend is maintained at 22 per cent, but is covered only 1.24 times by earnings. Recession in the chlor-alkali industry and loss of production due to power-cuts have resulted in reduced profits. The sixth and seventh paper machines at the Yamunanagar unit of the paper division were commissioned, but sustained production could not be established on these machines.

Signs of a Revival

Signs of a Revival Hansavivek MUKUND IRON AND STEEL WORKS has suffered a sharp setback during 1983*84 on account of a drop in production. Labour problems at the Kalwe plant, near Bombay was the major factur behind the unprecedented fail in output. After the phased lifting of the lockout commenced on May 25 last, the company has been recruiting temporary workmen selectively in various categories, With the help of these workmen and other non-striking employees it has been able to achieve upto 50 per cert of its normal production in the steel plant. Ffforts to recruit more skilled workmen arc continuing.

Keeping the Lead

Keeping the Lead Hansavivek BAJAJ AUTO has signed an agreement with Kawasaki, Japan, for the manufacture of motorcycles upto 100 cc engine capacity. This arrangement will enable the company to maintain its competitive edge in the emerging two-wheeler scene in India. The company has also signed an agreement with VIGEL of Italy for technical knowhow and assistance for manufacture of special purpose machine tools required for its own use. Drawings of the new design for Bajaj scooters from Industria Prototipi and Serie are expected 10 be received in the next few months. Production of scooters with the new body design is expected to commence from early 1986. Meanwhile, the company has developed a new 100 cc scooter which will be marketed under the brand name 'Bajaj- Cub' from early 1985. It has also developed on us own an 80 cc motorcycle which too will be put on the market by early 1985 under the brand name 'Bajaj-M80'.

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