Financial Daily from THE HINDU group of publications
Tuesday, Feb 07, 2006
Financial Daily from THE HINDU group of publications Tuesday, Feb 07, 2006 |
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Chemicals Corporate - New Projects Phillips Carbon to shelve plan for power project — Net loss in two consecutive quarters Kohinoor Mandal
Kolkata , Feb. 6 AFTER recording net loss for two consecutive quarters, Phillips Carbon Black Ltd, a RPG Group company, has decided to hold back its plans of setting up a 30 MW power plant. However, the company is confident of ending the current financial year on a positive note as the prices of carbon black have appreciated substantially both in the domestic and global market. Phillips Carbon Black, which is the country's biggest carbon black manufacturer and the ninth largest in the world, registered a net loss of Rs 4 crore and Rs 12.6 crore in the second and third quarter of 2005-06 respectively. Company sources said that the finances suffered due to high fuel prices, which constitute about 60-65 per cent of the total raw material cost. "As the core activity was suffering, the management decided to hold back the power project for the time being. More attention was given to the core business. Once we overcome the current problem, the company would take a fresh look into the new power plant project," sources said. This power plant is supposed to be set up at Durgapur in West Bengal. It would be adjacent to Phillips Carbon Black's existing plant. The cost of setting this unit was pegged at Rs 110-120 crore. The RPG Group had earlier decided to finance the project through debt and equity. The company was contemplating raising funds from the global market too. The Goenkas were even open to dilution of their stake from the present level of 52 per cent. Despite the losing profitability in the last two quarters, the top-line of the company was not affected. Gross sales of Phillips Carbon Black increased from Rs 196.83 crore in Q1 (April-June) to Rs 204.79 crore in Q2. In Q3, it was Rs 203.34 crore. "We are hoping that we might still end the current financial year with a net profit because carbon black prices have increased both in the domestic and global markets. As a result, the effect of the high fuel prices would be absorbed. This would substantially boost the bottomline," sources said. Sources, however, added that the proposed power project, which would be its second power unit, would be revived within a couple of months. The first one is located at Baroda and its capacity is 12 MW. It has a power trading agreement with Adani Power Trading Corporation. Phillips Carbon Black's total capacity is 2.7 lakh tonnes per annum. For the proposed Durgapur power plant, studies have already been conducted by Dasturco, ILFS Power and Descon.
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