Chennai facility to take off soon

Our Bureau

Hyderabad, Nov.1

Pennar Industries Ltd (PIL), the Hyderabad-based Rs 647-crore cold rolled products and formed products and components manufacturer, has reported a growth of 20.99 per cent in sales and 121 per cent increase in net profit for the quarter ended September 2006.

As per the unaudited financial results, the company has achieved sales of Rs 132.51 crore against Rs 109.52 crore in the corresponding quarter of previous fiscal and posted a net profit of Rs 6.19 crore (Rs 2.8 crore). This translates into an EPS of Rs 2.96 (Rs 1.63) on an expanded equity of Rs 41.8 crore (Rs 34.28 crore).

The PIL Chairman, Mr Nrupender Rao, attributed the improved profitability mainly to strategic shift in the company's focus towards value-added steel products and auto components from commodity cold rolled steel.

Stating that the ratio has now almost reached 50:50 from 60 per cent cold rolled steel and 40 per cent value-added products and components, he said the target is to further increase focus on value-added products and components, which ensured higher margins."The overall strategy is to increase the proportion of value-added niche steel products and reduce the quantum of commodity cold rolled steel, manufacture of auto components, increase quantum of exports, inorganic growth through acquisitions and focus on infrastructure with products such as pre-engineered steel buildings," Mr Rao said.

Chennai facility

Mr Rao said the Chennai facility of the company, coming up at a cost of Rs 25 crore, would be completely dedicated for automobile industry. The first phase of this facility would take off in three months time, while the entire project would be operational in another 6-8 months. The facility would add about Rs 100 crore of turnover per annum when it reaches to full capacity utilisation, he said."Going forward, the goal is to transform the company into predominantly auto components major, apart from serving the infrastructure segment with prefabricated buildings, road safety barriers and fabricated stacks for exhaust gases used in power projects," Mr Rao told Business Line.Through the recently concluded financial restructuring, the company received foreign investments of Rs 122.4 crore. A major portion of this was used to retire the long-term debt and a small component is being used as capital expenditure for Chennai facility, he said.

(This article was published in the Business Line print edition dated November 2, 2006)
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