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C.R. Sukumar

Hyderabad , Aug. 28

OIL Country Tubular Ltd (OCTL), the Hyderabad-based manufacturer of drill pipes, production tubing and casings for the oil and gas industry, is financially down and is now pinning its hopes on the reconstruction activities in the Gulf Region for reviving its fortunes.

Against a turnover of Rs 68.01 crore and a net profit of Rs 10.21 lakh during 2001-02, the company suffered a fall in turnover of Rs 54.41 crore and incurred a net loss of Rs 2.28 crore during the fiscal ended March 2003.

The company is also optimistic on its prospects since it had recently secured orders worth over Rs 120 crore from Oil and Natural Gas Corporation (ONGC) for execution by the fiscal-end, besides Rs 20-crore export orders from Syrian Petroleum Company.

According to the company, the exploration activities in oil and gas industry, which showed signs of improvement in the international market in the first quarter of last fiscal, received a serious setback due to the situation in the Gulf Region.

On the domestic front also, there were delays in the process of procurement and some changes were also made in the tendering policy. The drill pipe orders on the domestic front, which should have been received and supplied during last fiscal, were received in the first quarter of current fiscal and to be executed during the fiscal. These developments had adversely affected its turnover and profitability, the company informed the shareholders through a communication.

Oil Country is now of the view that "with the situation in the Gulf Region settling down now and reconstruction activities expected to be taken up on a war footing, the demand for company's products — drill pipes, production tubing and castings — is bound to increase."

However, the company opines that it cannot take advantage of the increased demand for the other two products — production tubing and casings, since the company cannot compete in the international and domestic markets due to non-availability of green pipes of required quality at competitive prices. Owing to this, it said that it was unable to utilise its processing capacity for casings and tubings.

The company could not also implement its diversification project on green pipes in view of its financial position, but assured shareholders that it was actively pursuing the project, which would take two years. At the end of March 2003, the company's accumulated losses stood at Rs 12.73 crore on an equity base of Rs 39.28 crore and the debt burden stood at Rs 111.13 crore.

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