Financial Daily from THE HINDU group of publications
Sunday, Jul 25, 2004
Financial Daily from THE HINDU group of publications Sunday, Jul 25, 2004 |
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Investment World
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Fixed Deposits Money & Banking - Fixed Deposits Columns - FD Watch Saw Pipes — `Steel'y interest G. Madhan
Considering the company's strong fundamentals and the attractive interest rates on offer, investment in all the tenors can be considered. Investors can, however, refrain from deploying large sums, given the risks involved in the cyclical nature of the business. Scheme features: The company offers cumulative and non-cumulative schemes. The rates are 7 per cent for one year, 8 per cent for two years and 9 per cent for three years. The cumulative scheme is compounded at quarterly rests and the annual yields for the same are 7.19 per cent for one year, 8.58 for two years and 10.20 for three years. Interest under the non-cumulative scheme is paid at quarterly intervals. The minimum deposit requirement is Rs 15,000 for the cumulative scheme and Rs 21,000 for the non-cumulative scheme. The company's address is Jindal Centre, 12 Bhikaji Cama Place, New Delhi 110066. Business prospects: Saw Pipes makes submerged arc welded pipes, thick-walled pipes and cold-rolled steel coils. These pipes are used to transport oil, gas and water. The demand for Saw Pipes' products is largely project-driven and its fortunes are cyclical in nature. An analysis of the company's revenues and earnings over the last seven years also reflects the element of cyclicality. Given the growing requirement for piping infrastructure for transporting petroleum and water, the company has good prospects for growth. As Saw Pipes relies on imported steel plates and coils for its pipes, it is exposed to foreign exchange fluctuations, higher lead time for transportation of the raw material and the macro-economic conditions of the countries from which the company imports its raw materials. In the near-to-medium term, the company does not face a significant risk on account of these extraneous factors. Financials: For the six months ending March 2004, revenues rose 65.8 per cent to Rs 358.9 crore compared to the corresponding previous period. Operating profits rose 71.7 per cent to Rs 61.2 crore and operating margins by 60 basis points to 17.1 per cent. Due to the stable interest outgo, despite a substantial rise in revenues, earnings more than doubled to Rs 22.9 crore. Saw Pipes is well-placed to ensure payment of interest and repayment of the deposits.
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