Companias

NICHOLAS PIRAMAL INDIA

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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.

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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

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.

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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