CompanyWatch : EID-Parry
Coromandel Fertilizers
cflindia.com
Parrys Neem
india2001.com
india2001.com
ParrysWare
parry-ceramics.com
EID-Parry: Reaping a good harvest
Poornima kavlekar (BL Research Bureau)
EID-Parry is accepting fixed and cumulative deposits. Belonging to the Chennai-based Murugappa group, the company offers 11 per cent, 12 per cent and 13 per cent respectively for one, two and three years. Given the company's strong fundamentals and background, an investment can be considered. But considering the lower return from the one-year scheme, investors can opt for the two- or three-year programmes.
EID-Parry is a prominent player in the fertiliser industry with a large distribution network in the southern States. Besides fertilisers, it manufactures plant protection chemicals, sugar and sanitaryware. In a bid to focus on the core areas of business interests, the Murugappa group plans to hive-off and sell some of its businesses. As part of this move, EID-Parry has sold its magnetic tapes division to RPG Enterprises. Also, the bio-technology major _ Monsanto _ is acquiring a 51 per cent stake in EID-Parry's seeds divisions. This restructuring exercise is likely to benefit the company in the coming years.
Financially, EID-Parrys' performance has been reasonably good. In fact, the trend of a hike in ad hoc concessions extended to phosphatic fertiliser manufacturers could improve the profitability over the medium term. Over the past five years, the turnover has grown by 17 per cent per annum and the post-tax earnings by 16 per cent. Other financial parameters also provide comfort for those investing in the company's fixed deposit programme. The interest cover is a reasonable 1.6 times the earnings. The net worth went up to Rs. 391 crores from Rs. 363.38 crores in 1997-98.
For 1998-99, the company's turnover increased to Rs. 981.18 crores from Rs. 913.03 crores, up 7.5 per cent. The operating margins went up to 13 per cent from 10.5 per cent. For 1998-99, the company was burdened with high interest charges mainly due to the higher sugar stock and commissioning of new facilities. Despite the higher interest and depreciation charges, due to higher operating profit margins, the post-tax earnings grew around 22 per cent to Rs. 47.12 crores from Rs. 38.58 crores. On an equity base of Rs. 17.81 crores, the per share earnings stands at Rs. 26.
For the first quarter of this fiscal, the company's turnover grew 24 per cent to Rs. 222.16 crores from Rs. 179.24 crores in the corresponding previous period. The operating margin rose to 15 per cent from 11.40 per cent. The company registered a net profit of around Rs. 10.20 crores against a loss of around Rs. 1.83 crores in the corresponding previous quarter. The company is setting up a greenfield sugar plant with a capacity to crush 2,500 tonnes of sugarcane per day.
The project, expected to be completed by March 2000, will take the total crushing capacity to more than 14,000 tcd. The company also acquired 100 per cent of the equity and preference shares in Johnson Pedder, engaged in sanitaryware with a capacity of 10,000 tonnes, at Dewas, MP. This will take the total sanitaryware manufacturing capacity to 34,000 tonnes per annum. These are likely to improve the revenues of the company over the next few years.
Given the reasonable financial performance, strong fundamentals and the ongoing restructuring exercise, the company's future prospects may improve. Investors can consider adding EID-Parry to their portfolio of fixed-income instruments, especially for the longer tenures on offer. |
