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Chennai , Dec. 23

TAMIL Nadu Industrial Explosives Ltd will start commercial sales of emulsion-based explosives next year even as it will have to comply with a Government of India directive to reduce the manufacture of nitro glycerine-based explosives.

The use of nitro glycerine explosives is to be banned from 2006, and regulations require that its use be reduced by 50 per cent by April 2004.

Addressing shareholders at the annual general meeting here on Tuesday and later talking to Business Line, the company's Chairman and Managing Director, Mr L.K. Tripathy, said that it has set up a facility to manufacture emulsion-based explosives at a cost of Rs 5.17 crore.

The company, which wiped out accumulated losses of Rs 5.51 crore in 2002-03, is on the growth path and has reported a net profit of Rs 77.88 lakh in the first six months of 2003-04 on net sales of Rs 21.75 crore.

Since the company is facing stiff competition, the margins are under pressure despite increase in turnover. It is looking at various cost conservation measures, including introduction of a voluntary retirement scheme, to remain competitive.

Mr Tripathy expressed optimism that Tamil Nadu Industrial Explosives' fortunes would pick up once it got into emulsion-based explosives. He even hoped that it would be able to report a net profit this year also, after which the company could consider declaring a dividend. However, he cautioned the shareholders that various concessions available to the company, like sales tax-based incentives, would no longer be available.

The company manufactures nitro glycerine explosives, detonators and detonating fuse. Following the shift to emulsion explosives, it will have a capacity to manufacture over 50,000 tonnes explosives a year. In the first year, it plans to manufacture about 12,000 tonnes of emulsion explosives. Its product range will include non-permitted small dia emulsion explosives, non-permitted large dia emulsion explosives, permitted small dia emulsion explosives and bulk emulsion explosives and non-electric detonators.

It may be recalled that the public sector enterprise is one of the first to be marked for disinvestment by the State Government. The government had called for bids from consultants to handle the entire process of selling its 83 per cent stake, from initial memorandum to identifying the successful bidders.

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