The total debt of SRML stood at Rs 338 crore as on September 30, 2001.
To add to investors woes the Company Law Board has passed an order staying the holding of any meeting of the SRMLs board to take on record the audited results for the half year ended September 30, 2002. Hence, investors can do little but to wait before they know the results for the last quarter of the year. The company had already announced results for the quarter to June 2002.
Financial institutions and investors have a reason to be dissatisfied with the performance of SRML. The company reported a fall between 10 to 50 per cent in operating income for the three quarters to June 2002. Operating income declined from Rs 53 crore in the quarter to December 2001 to Rs 30 crore in the quarter to June 2002.
SRMLs bottomline has eroded too. It has slipped into the red at Rs 24 crore during the quarter as against Rs 10 crore in the same quarter a year earlier.
Surprisingly enough, SRML has refused to learn a lesson from such pathetic show. The company went ahead with a declaration of 30 per cent dividend that was rightly banned after the FIs protested.
Earlier, the company had defaulted on payment of its debt citing poor financial performance and liquidity as the reason.
SRML has been facing tough times because of sluggish demand and stiff competition from Essel Propack.
The company is an integrated packaging solutions provider to the FMCG industry with a focus on plastic laminated tubes, labels/stickers and speciality packaging & plastic products.
It is unlikely that SRMLs results during the quarter to September 2002 may differ radically from those in the previous.
This saga also teaches a few lessons to institutional investors, who wake up only when the damage is done.
Motherson Sumi Systems
Motherson Sumi Systems (MSSL), the auto-ancillary company, has done well on the back of automobile sectors ongoing recovery. Its 90 per cent revenue comes from the automotive segment.
MSSL recorded 64 per cent growth in net profit to Rs 7.2 crore owing to a 16.6 per cent increase in sales to Rs 82.6 crore. However, the impressive bottomline growth largely owes to a 31.5 per cent decrease in tax provision to Rs 2.7 crore.
Although consumption of raw material, as a percentage of sales, went up to 47.8 per cent (45.2 per cent), the company could curtail other costs. Other expenditure fell by 5.3 per cent to Rs 18.8 crore.
Consequently, operating profit fattened 37.7 per cent to Rs 16.6 crore. The gain on account of a 21.9 per cent decline in interest cost to Rs two crore was more than offset by a 31.5 per cent rise in depreciation to Rs 6.2 crore. Other income skidded 59.4 per cent to Rs 1.4 crore, which ensured a moderate growth of 19.1 per cent in PBT at Rs 9.8 crore.
MSSL stock witnesses a low trading activity because its floating stock is low at 28.9 per cent. The companys management has split the face value of Rs 10 per equity share into two shares of Rs 5 each, which has increased the number of shares available for trading.
MSSL is specialised in making wiring harnesses and cords for passenger car segment. It has a stronghold in the segment as it controls a substantial share of the market.
The company also supplies its products to other segments such as multi-utility vehicles and two-wheelers. MSSLs top customers include Maruti and Telco.
The company also has a 100 per cent export oriented unit (EOU) to cater for international giants such as Honda and Woco in overseas market.
Prashant Kothari & Manish Joshi