RPG Enterprises controlled Phillips Carbon Black Ltd (PCBL) plans to set up a new manufacturing unit near Ennore in Tamil Nadu at an estimated cost of Rs. 500 crore. It will be the company's largest unit in the country with an annual capacity of 140,000 tonnes.
The project will require 60 acres and will also include a co-generation facility. The State Industries Promotion Corporation of Tamil Nadu (SIPCOT) is in the process of allotting land for the project.
“Tamil Nadu is the emerging automobile hub in the country and tyre manufacturers are already setting up facilities in the State,” Mr Sanjeev Goenka, Chairman, PCBL, said.
PCBL currently produce 360,000 tonnes a year. The production will increase by 50,000 tonnes by the second quarter of this fiscal following capacity escalation of the Mundra (Gujarat) facility.
Margins hit
Meanwhile, PCBL reported an eight per cent decline in net profit to Rs 33 crore during the quarter ended March 31, 2011. The company reported a net profit of Rs 36 crore during the corresponding period in 2009-10. Net sales, however, grew by nearly 22 per cent to Rs 444 crore.
The board has also proposed a dividend of 50 per cent for 2010-11. The company offered 50 per cent dividend in 2009-10. The net profit for 2010-11 decreased by nearly 6 per cent to Rs 116 crore.
Commenting on the decline in profit, Mr Goenka said that the spiralling crude oil prices and resulting volatility in price of carbon black feedstock (CBFS), have “hit” PCBL's margins.
On Price hike
“We have not passed on the rise in input costs because of this our margins have been affected,” he said, adding that the recovery of costs would require 10 per cent hike in prices.
“Ultimately increase in costs needs to be passed on to the end-users,” he said.
According to company sources, the raw material prices have gone up by Rs 4 a kg leading to approximately Rs 12 crore increase in cost a month.
Efforts are on compensate part of the cost-push through better utilisation of the co-generation facilities using the tail gas for generation of electricity.
On Tuesday, PCBL shares closed at Rs 142, down by over three per cent, at BSE.
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