The Hindu Business Line : Nicco Corp shines on growth hopes

NICCO Corporation on Thursday closed at its upper circuit on the BSE with a traded volume of 3.78 lakh shares on improvement in growth prospects and implementation of the corporate debt restructuring plan soon.

According to analysts, the power cable manufacturing and engineering projects company's topline growth is likely to be maintained in view of the new greenfield power and steel projects coming up. As a result of continued growth in sales and new CDR package, the losses may drop substantially during the current fiscal.

Mr Rajive Kaul, Chairman of the company, told Business Line that demands for the power cables after a phenomenal rise in 2004-05 were continuing to grow at a decent rate this fiscal too. "In 2004-05, our cables sale grew roughly by 60 per cent. This year we may achieve a growth rate closer to that. Moreover, we are likely to outperform the power cable industry growth rate," the Nicco Chairman added. He confirmed that margins are also improving.

"Particularly, in case of projects division, new contracts are seeing better rates. Last year, the sharp rise in steel and cement prices had a negative impact on the margins of the project contracts, which were struck at a fixed price earlier," he explained.

The division has customers such as Nuclear Power Corporation, Ahmedabad Urban Development Authority, ONGC, Indian Oil and Tata Steel.

Under the CDR package, formalised this month, the company would make preferential equity issue to Asset Reconstruction Company (India) Ltd (ARCIL) up to a total value of Rs 9 crore and to Nicco Restructuring Employees' Trust Fund of a maximum value of Rs 2 crore.

During 04-05, Nicco paid an interest of Rs 27.36 crore, up from 03-04 figure of Rs 24.94 crore. It reported a net loss of Rs 23 crore against the loss figure Rs 35.79 crore in 2003-04. The cables division, however, made a profit before tax of Rs 12.25 crore compared to a loss of Rs 8.16 crore in 2003-04.

According to an analyst, the CDR would reduce the interest burden substantially, expected to be implemented within a couple of months, and would brighten the chance of the company returning to the black. The current market capitalisation of around Rs 65 crore appears attractive in the context of enterprise value and growth possibilities, he added.

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