Micro Inks turns around in 4th quarter

Printing ink major Micro Inks has managed to turn around a year after German major Huber picked up 70 per cent stake in the company.

After suffering losses for three consecutive quarters, the Vapi-based company posted a consolidated profit of Rs 12.1 crore during the March 2007 quarter.

Exports, which contributed 60 per cent to the revenues, is expected to grow further with the company benefiting from Huber's outsourcing activities.

The $300 million domestic printing ink market is growing at 12-15 per cent a year. Analysts expect the spread of urbanisation and higher literacy levels to further fuel growth.

The company's scrip, reflecting the optimism, is close to its 52-week-high of Rs 468. In the last one month, the stock has gone up 34 per cent on the back of strong quarterly results. On Thursday, the scrip gained 1.46 per cent to Rs 462.70.

R V Chari, finance director, said the company implemented quite a few changes after Huber bought the stake. These include infusion of world-class technology at its manufacturing facilities and conversion of the Vapi plant into an export-oriented unit.

The company suffered a forex loss following the high crude prices, while it also made some provision for doubtful debts. "All this impacted our bottom line in the first three quarters. The one-time provisioning for this extraordinary item and the absence of these factors in the fourth quarter led to the turnaround," said Chari.

Micro Inks has stopped exports to European markets where its partner has a presence. Huber is outsourcing raw material supplies to Micro, as it wants to set up its raw material division in India. Micro would be providing pigments, resins and additives to the Huber group.

"We have reorganised our strategy after losses in the first nine months. We are expecting better sales from Huber's outsourcing to us and better capacity utilisation. Exports also could see improvement," said Chari.