Companias
NICHOLAS PIRAMAL INDIA
Steering Contracts and M&As
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During 2004-05, NPIL’s financial performance deteriorated. The company’s net sales declined by 2.9 per cent to Rs 1,232 crore over 2003-04; likewise net profit decelerated by 9.8 per cent to Rs 169 crore. On the export front, NPIL continued building its export strategy of collaboration with foreign companies for manufacturing contracts. Its foreign exchange earnings shot up by 120 per cent to Rs 222 crore in 2004-05. During the year under review, NPIL commissioned its new research and development (R&D) centres at Goregaon, Mumbai, one of the largest single site pharmaceutical R&D centres in the country and launched a total of 36 products under its various segments.
In sync with the wave of mergers and acquisitions (M&As) in the pharmaceuticals industry NPIL recently acquired Avecia Pharmaceuticals, UK at around Rs 76 crore and in July 2004, it acquired the Dobutrex brand from Eli Lily & Company, US, for the Indian market. NPIL also acquired 17 per cent equity shares in BioSyntech Inc, Canada for Rs 22.3 crore. This acquisition enables the company to enjoy the marketing rights of current and future products of BioSyntech Inc for India and seven other Asian countries. The company also took over the inhalation anaesthetic business of Rhodia Oraganique Fine of UK for $ 14 million.
NPIL recently entered into a contract manufacturing agreement with Pfizer International Llc (limited liability company) for veterinary related R&D services for seven years. The company signed a development and know how agreement with the Swedish multinational AstraZeneca AB. Under this agreement, the company will establish a framework for future collaboration to develop processes for the manufacture of intermediates, active ingredients or bulk drugs for supply to AstraZeneca. NPIL completed a product in-licensing agreement with Ethypharm, France, for the Indian market to source raw materials and manufacture dispersible formulations using the technology at its Pithampur plant. It will distribute the product in the Indian market under its own brand name, which will further augment its presence in the fields of pain relief and paediatric care.
NPIL registered 8.8 per cent growth in net sales at Rs 373 crore for April-June 2005 and net profit rose by 11 per cent to touch Rs 54 crore over the corresponding period of the previous year. Export for the quarter surged by 49 per cent to Rs 56 crore. For the quarter ended September 2005, net sales dipped by 2 per cent to Rs 345 crore; however, net profit grew by 37 per cent to Rs 54.9 crore over the same period of the previous year. Exports for the quarter increased by 21.6 per cent to Rs 53.4 crore.

NIRMA
Chugging Along
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During 2004-05 Nirma posted a healthy financial performance. Its net sales increased by 5.5 per cent to Rs 1,838 crore and net profit rose by 15 per cent to Rs 284 crore over 2003-04. The company’s foreign exchange earnings stood at Rs 66 crore – a rise of 6 per cent. Nirma registered 4.6 per cent growth in detergent sales by achieving sales of 7.7 lakh tonnes during the year under review. The company is one of the major producers of soda ash in India and registered a growth of 15 per cent to produce 5.4 lakh tonnes of soda ash over the corresponding period of previous year.
Faced with soaring oil prices in the local as well as global market Nirma witnessed a rise in the cost of production in toilet soaps, which declined by 5 per cent over 2003-04 to 97,630 tonnes. The company’s production of glycerine was also lower by 10 per cent at 5,486 tonnes and the sale of single super phosphate fertiliser also decreased by 6 per cent to 81,061 tonnes.
For the soda ash project, Nirma has imported dry lime process technology from Akzo Nobel Engineering BV of the Netherlands. The technology was selected to achieve the advantages of energy conservation, reduced stream consumption as well as water requirements and lower effluents. In June 2005, Nirma acquired the S K Birla group-controlled Saurashtra Chemicals from the Asset Reconstruction Company of India (Arcil) at a cost of over Rs 300 crore.
At the extraordinary general meeting (EGM) of Nirma held in November 2005, shareholders of the company have approved the split of equity shares in the ratio of 1:2. As per the scheme, every Nirma shareholder with one fully paid up equity share of Rs 10 would get two equity shares of Rs 5 each, fully paid up. The EGM also approved the composite scheme of the compromise and arrangement between Core Healthcare (CHL) and Nirma, whereby one equity share of Rs 5 each of Nirma would be allotted for 80 equity shares of Rs 10 each held in CHL.
During April-June 2005, Nirma’s net sales showed a marginal improvement of 0.3 per cent at Rs 488 crore while net profit grew by 27 per cent to Rs 77 crore over the same period of the
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Economic and Political Weekly January 14, 2006
The Week’s Companies
(Rs lakh)
Nicholas Piramal Mahavir Spinning Nirma Financial Indicators 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04
Income/Appropriations | |||||
---|---|---|---|---|---|
1 Net sales 123225 | 126905 | 185086 | 108141 | 183887 | 174238 |
2 Value of production 129680 | 128059 | 183804 | 109691 | 182143 | 173108 |
3 Other income 3912 | 2433 | 1791 | 1128 | 872 | 1099 |
4 Total income 133592 | 130492 | 185595 | 110819 | 183015 | 174207 |
Raw materials/stores and spares/ | |||||
power and fuel consumed 65515 | 62665 | 111253 | 68312 | 114077 | 98499 |
6 Other manufacturing expenses 2710 | 1560 | 11339 | 4349 | 2215 | 2171 |
7 Remuneration to employees 14129 | 12904 | 9962 | 5496 | 4192 | 4099 |
8 Other expenses 24587 | 29329 | 22397 | 15028 | 11087 | 13306 |
9 Depreciation 4742 | 4109 | 9701 | 5678 | 15671 | 15557 |
Gross profit 21909 | 19925 | 20943 | 11957 | 35773 | 40575 |
11 Interest 1750 | 1642 | 5909 | 4024 | 967 | 2936 |
12 Operating profit 20159 | 18283 | 15033 | 7933 | 34806 | 37639 |
13 Non-operating surplus/deficit 470 | 0 | 934 | 302 | 475 | 64 |
14 Profit before tax 20629 | 18283 | 15967 | 8235 | 35281 | 37703 |
Tax provisions 3672 | -518 | 3891 | 2219 | 6816 | 13023 |
16 Profit after tax 16957 | 18801 | 12076 | 6016 | 28465 | 24680 |
17 Dividends (includes tax on | |||||
dist profit) 5983 | 5867 | 1733 | 1159 | 3986 | 3192 |
18 Retained profits 10974 | 12934 | 10343 | 4858 | 24479 | 21488 |
Liabilities/assets | |||||
19 Paid-up capital 9137 | 5300 | 2575 | 2575 | 8217 | 8217 |
Reserves and surplus 45430 | 35296 | 7618 | 47479 | 179251 | 155339 |
21 Long-term loan 2003 | 5976 | 11634 | 7642 | 51120 | 52858 |
22 Short-term loan 33408 | 27721 | 63324 | 44098 | 6650 | 15069 |
(i) of which, bank borrowings 33408 | 27721 | 63324 | 44098 | 6650 | 15069 |
23 Gross fixed assets 85401 | 66015 | 153682 | 79177 | 274696 | 272269 |
24 Accumulated depreciation 16608 | 13009 | 72810 | 35604 | 82824 | 67267 |
Inventories 27467 | 19559 | 52693 | 40110 | 30660 | 31961 |
26 Total assets/liabilities 126385 | 108512 | 179234 | 115526 | 295201 | 283261 |
Miscellaneous items | |||||
27 Excise duty 15243 | 16561 | 8051 | 7416 | 31034 | 29312 |
28 Gross value added 39375 | 37287 | 39528 | 22360 | 55009 | 59397 |
29 Total foreign exchange earnings 22189 | 10083 | 41308 | 27691 | 6608 | 6037 |
Total foreign exchange outgo 24277 | 14166 | 17559 | 9959 | 18471 | 22753 |
Key financial and performance ratios | |||||
31 Turnover ratio(sales to total assets) 1.2 | 1.4 | 1.3 | 1.0 | 0.7 | 0.7 |
32 Gross value added to gross | |||||
fixed assets (%) 52.0 | 68.9 | 34.0 | 28.5 | 20.1 | 22.0 |
33 Return on investment (gross profit | |||||
to total assets) (%) 18.7 | 20.0 | 14.2 | 10.6 | 12.4 | 14.2 |
34 Gross profit to sales | |||||
(gross margin) (%) 17.8 | 15.7 | 11.3 | 11.1 | 19.5 | 23.3 |
Operating profit to sales (%) 16.4 | 14.4 | 8.1 | 7.3 | 18.9 | 21.6 |
36 Profit before tax to sales (%) 16.7 | 14.4 | 8.6 | 7.6 | 19.2 | 21.6 |
37 Tax provisions to profit before tax (%) 17.8 | -2.8 | 24.4 | 26.9 | 19.3 | 34.5 |
38 Profit after tax to net worth | |||||
(return on equity) (%) 35.6 | 47.9 | 40.1 | 12.6 | 16.2 | 16.1 |
39 Dividend (%) 56.3 | 96.5 | 57.9 | 39.2 | 41.6 | 33.9 |
Earnings per share (Rs) 8.9 | 9.9 | 46.9 | 23.4 | 35.9 | 31.1 |
41 Book value per share (Rs) 28.7 | 21.4 | 39.6 | 194.4 | 236.2 | 206.0 |
42 P/E ratio (multiple) 16.6 | 19.0 | 10.1 | 7.3 | 11.1 | 9.5 |
43 Debt-equity ratio (adjusted for | |||||
revaluation) 0.65 | 0.83 | 7.35 | 1.03 | 0.31 | 0.42 |
44 Short-term bank borrowings | |||||
to inventories (%) 121.6 | 141.7 | 120.2 | 109.9 | 21.7 | 47.1 |
Sundry creditors to sundry | |||||
debtors (%) 143.8 | 89.9 | 19.7 | 13.1 | 42.9 | 71.7 |
46 Total remuneration to employees | |||||
to value added (%) 35.9 | 34.6 | 25.2 | 24.6 | 7.6 | 6.9 |
47 Total remunerations to employees | |||||
to value of production (%) 10.9 | 10.1 | 5.4 | 5.0 | 2.3 | 2.4 |
48 Gross fixed assets formation | |||||
(% growth) 29.4 | 56.4 | 94.1 | 2.2 | 0.9 | 1.3 |
49 Growth in inventories (%) 40.4 | 14.9 | 31.4 | 28.7 | -4.1 | 16.4 |
previous year. However, for the quarter ended September 2005, net sales suffered by 16.6 per cent to reach Rs 485 crore over the corresponding period of previous year, but net profit shot up by 118 per cent to Rs 99 crore.

MAHAVIR SPINNING MILLS
Spinning Successfully
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During 2004-05, MSM achieved robust financial performance. Its net sales galloped ahead by 71 per cent to Rs 1,851 crore over 2003-04; likewise net profit surged by 100 per cent to Rs 120 crore. The company’s exports grew by 49 per cent to Rs 413 crore during the year under review. The sales revenue of yarn increased by 52 per cent to Rs 997 crore over 2003-04; similarly the revenue of sewing thread rose by 9.5 per cent to Rs 255 crore.
MSM recently announced its plans for the expansion and modernisation of its plants. This plan is divided into two parts
– Rs 540 crore for expanding and modernising its existing capacities of spinning, weaving and fabric processing in Himachal Pradesh and Punjab, and Rs 1,075 crore investment for doubling its fabric processing capacities and setting up additional facilities for spinning and weaving in Madhya Pradesh. The implementation of these projects will be in phases and is expected to be completed by 2007-08.
During April-June 2005, MSM’s net sales improved marginally by 2.2 per cent to Rs 422 crore over the same period of the previous year and net profit rose by 62 per cent to Rs 28.9 crore. For July-September 2005, net sales declined by 3.9 per cent to Rs 459 crore over July-September 2004; however, net profit increased by 62.5 per cent
Note: P/E multiples are the latest with corresponding last year’s figures. to Rs 39.9 crore.
Economic and Political Weekly January 14, 2006
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