Financial Daily from THE HINDU group of publications
Sunday, May 12, 2002
Indian Seamless wipes out losses
PUNE, May 11
WITH a financial restructuring package put in place, Indian Seamless Steels and Alloys Ltd., (ISSAL) has wiped out its accumulated losses of Rs. 240 crore as of September 30, 2001.
Mr. Sudhakar Kudva, Executive Director (Finance) of ISSAL, told presspersons that this had been achieved by transfer of assets at fair market value which, in turn, reduced the losses to the tune of Rs. 100 crore. The company had also obtained sales tax benefit for Rs. 40 crore.
With this, the company has begun the current financial year on a clean slate. He, however, said that the company has an interest burden of about Rs 40 crore per annum and added that it was in talks with financial institutions to bring down the rate of interest and software repayment period.
Mr. O. P. Kakkar, Managing Director, noted that the performance of the company had undergone an improvement, considering the performance of the overall alloy steel sector. As against the average for 2001-02, the average monthly dispatches in the last quarter of the previous financial year had increased by 35 per cent.
"One of the major contributors to the turnaround and growth of the company is the in-house demand generation that resulted after the ISMT-KSTL merger,'' he said.
He noted that the contribution per tonne had also increased and this had been possible with the implementation of a productivity and efficiency improvement plan, designed in collaboration with Danieli of Italy. The plan, still under implementation, focuses on process time and cost reduction, yield improvement and input, particularly power-cost reduction.
Looking at the current financial year, Mr. Kakkar said as per the plan developed, the company would sell 1,80,000 tonnes of steel valued at Rs 450 crore and "this would result in the generation of net profit.'' The production capacity of the plant is 1,90,000 tonne.
About 50 per cent of the production is utilised by Indian Seamless Metal Tubes Ltd (ISMT) and the rest is sold in the domestic market.
The company is also planning to make inroads into the export market during the current financial year. ISMT, the single largest buyer, has drawn up a business plan for 2002-03 and is estimating a growth of about 15 per cent over the previous year. "This is primarily coming in from exports which are expected to grow by about 45 per cent to about 35,000 tonnes,'' he added.
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