The Hindu Business Line : Hydro S&S to spend Rs 4 cr on capacity expansion

HYDRO S&S will spend Rs 4 crore on capacity expansion by 33 per cent, whereupon the company will be able to produce 15,000 tonnes a year of reinforced plastics, which are mainly used in automobiles.

The company produces polypropylene compounds - mineral and glass-reinforced polypropylene and nylon-reinforced polypropylene. These plastic compounds find application in automobile, battery and furniture industries. Auto components such as front and rear bumpers, dashboards, interior trims and components for air-conditioning systems need these plastics. The company also manufactures thermoplastic elastomers, which are used in the production of water seals, bellows and grips for handles. About 70 per cent of the turnover comes from automobiles.

Hydro S&S, part of the Chennai-based WS group of companies, expects to close the year with a turnover of Rs 60 crore, against Rs 48.30 crore last year and Rs 41.52 crore in the year before. The company is a supplier to car manufacturers like Maruti, Hyundai and Telco. Last year, the company made a net profit of Rs 1.89 crore. Profits too are expected to grow this year, though not in the same proportion as sales.

In the half-year ended September, the company's net income was Rs 28.92 crore, compared with Rs 23.19 crore in the corresponding period of last year. The net profit was marginally lower - Rs 1.58 crore compared with Rs 1.61 crore previously - because the increase in polypropylene prices had more than negated the benefits of lower interest costs. But after the Iraq war ended, PP prices have declined and the company says the performance in the second half is good enough for a growth in the annual profits.

The Hydro S&S Managing Director, Mr Murali Venkatraman, told Business Line that the company would prefer to join hands with plastic extruders (those who make plastic products) "to develop cost-effective substitutes for high cost engineering plastics and high performance compounds."

Talks are on with a few, but Mr Venkatraman said their names were "confidential for now." Joining hands with extruders would lead the company to export markets, he said.