Take-over Blues

Take-over Blues Hansavivek KEC INTERNATIONAL, formerly Kamani Engineering Corporation, proposes to further diversify its activities. It has applied to the Central government for grant of an industrial licence for manufacture of specialised varieties of cement. The directors are also considering proposals for the manufacture of electrical motors, generators, certain items of petrochemicals, etc The company has suffered a setback in its working during 1983-84 with gross profit falling from previous year's Rs 6.42 crore to Rs 4.18 crore despite increase in turnover from Rs 62.12 crore to Rs 68.83 crore. These figures reflect a severe pressure on profit margins. Net profit has tumbled from Rs 3.04 crore to Rs 1.19 crore. The directors have recommended an equity dividend of 12.5 per cent on the capital enlarged by a one-for-one bonus issue, which works out to 25 per cent on old capital as against 20 per cent paid last year. Dividend cover has thinned-down to 3.08 times from 10.07 times previously. The company secured during the year orders of the value of Rs 13.20 crore for supply and construction of transmission line towers and line material, both for local and overseas markets. For the local market, the total number of tenders decided were lower in value than in the previous year. Severe competition continued in the overseas markets due to the impact of recession. Competition in the indigenous market is also becoming tough with a number of new parties having come in the field. The company has almost completed its work in Iran and is trying to get a further supply order of the value of Rs 4.82 crore. For the turnkey job of 220 KV DC Bundle Conductor Line in Libya, a letter of credit has recently been established by the clients. In Thailand, the turnkey job of 230 KV-163 kms line has been completed, but in view of the difficult terrain and other circumstances, it has resulted in a loss. In respect of work done in Iran under the contractual obligations, a part payment is received from Iranian authorities in foreign currency and balance payment continues to be received in Iranian currency. The surpluses arising out of the work done for which payments are made in Iranian currency are lying as deposits with the various banks in Iran. Applications for permission to remit these funds have been made and are being considered by the Government of Iran.