The Hindu Business Line : Riddhi Siddhi Gluco remains firm on fundamentals

THE stock of Riddhi Siddhi Gluco Biols, which is going ex-dividend tomorrow, ruled firm on the stock exchanges with decent traded volumes on strong improvement in fundamentals and growth prospects. It finished at Rs 75.60 on the BSE. It touched a 52-week high of Rs 84.50 on June 9.

In the past one year, the stock has steadily moved up from Rs 6 on improvement in its numbers. The company has recommended 15 per cent dividend for 2004-05.

According to Milan Bavishi of Anagram Stockbroking, the starch and sweetener manufacturing company has recorded significant increase in revenues in the last financial year on the back of rise in demand for both starch and sweeteners. Corn, the company's primary raw material has seen substantial reduction in prices in the last one year. "This along with higher realisation has also helped the company to improve its bottomline," Mr Bavishi said.

Starch is used in foodstuff, medicine, paper, textiles, feed chemical and petroleum. Sweeteners (glucose, high maltose corn syrup, fructose syrup and dextrose) are used in the pharmaceuticals and soft drinks.

Mr Ganpatraj L. Chowdhary, Managing Director and one of the promoters of the company, told Business Line over phone that the company was planning to reduce the interest cost through a rate swap. "A downward correction in the rate would be reflected in the 2005-06 balance sheet," he added. Mr Chowdhary also said after a modest beginning in exports last fiscal, the company was targeting 10 per cent (of the turnover) exports in the current fiscal.

He confirmed the company was considering a capital expenditure plan, which is expected to be finalised, soon.

It has planned to issue 10 lakh warrants at Rs 50 per warrant, convertible after 12 to 18 months period, to Siwan Engg, a holder of 8 per cent non-cumulative redeemable preference shares of Rs 5 crore. This, after conversion, would increase the current equity base.

It has reported an operating profit of Rs 25.18 crore. The interest cost of Rs 12.19 crore and depreciation of Rs 7.72 crore placed the net at Rs 3.95 crore.

According to a fund manager, low input cost, lower interest rate, higher sales of around 34 per cent and better realisation may push the profits sharply upward this fiscal. "If the Q4 of 2004-05 sales of Rs 61.25 crore, PAT of Rs 1.31 crore and the operating profit of Rs 7.45 crore are any guide, then the company may post an operating profit around Rs 30 crore for 2005-06," the fund manager observed.

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