At best, the company can claim to have pared its losses by around 15 per cent. On the bourses, however, the scrip has been rising on the back of the bullish sentiments in the market. In less than a week, the stock has gained nearly 50 per cent to Rs 12.15. The rise in the prices could also be attributed to the buying frenzy in cable stocks because of huge orders anticipated from DoT. As Finolex Industries mainly feeds the group flagship, Finolex Cables, punters are banking on a better growth in bottomline for the full-year 1998-99. For the six-months ended January 1999, Finolex Industries has substantially reduced its expenditure primarily through cost-cutting measured implemented by the company. Consequently, margins at the operatinglevel have improved from 10 per cent to 18 per cent. However, a higher interest cost and higher depreciation provisioning pared profits to that extent. Finolex Industries, like all petrochem polymer producers, has had to contend with cheap imports from south-east Asian producers. The sharp devaluation in the currencies of South Korea and Thailand has not only kept PVC prices on a tight leash, but also threatened Indian producers with dumping of cheap imports.

Faced with falling international prices, Finolex Industries found a noble way to prop up its cash flow. The company struck a deal with Bharat Shell to lease out LPG storage tanks and berthing time at its Ratnagiri jetty and planned to hypothecate the receivables therefrom to generate an upfront revenue of close to Rs 100 crore. Under the licensing arrangement, Finolex will provide specially-built LPG storage tanks, with a capacity of 2 lakh tonnes per annum, to Bharat Shell along with necessary pipeline facilities and LPG bullets, besides offeringberthing facilities for import of LPG.

Finolex Industries manufactures PVC resin, pipes and fittings at its manufacturing facility in Pawas, Maharashtra and the all-weather jetty at Ratnagiri is used by Finolex for import of feedstock. The licensing deal will help the company improve its cash flow as it will be able to receive funds upfront through discounting of future receivables (license fees) with banker, Bank of Baroda. Bharat Shell, in turn, will be required to pay the licence fees to the bankers.