Premier Explosives to focus on core areas

Premier Explosives Limited (PEL), one of the leading manufacturers of industrial explosives and detonators in India, is hiving off its mushroom division and proposes to deploy the sale proceeds in its core competency areas.

"We have been thinking about selling the mushroom unit for a long time but could not get a buyer. Now, with the unit making a profit of over Rs 20 lakh per month, people came forward to purchase it and we have finalised the deal," PEL vice-chairman and managing director, A N Gupta, told Business Standard. He, however, declined to disclose the sale amount.

Spread over an extent of 38 acres at Kallakal village near here, PEL's mushrooms division posted a turnover of Rs 14.92 crore and a gross profit of Rs 2.08 crore during the first nine months of the current financial year.

In 2005-06, the company exported mushrooms valued at Rs 3.81 crore.

Gupta said that the money raised through the sale would be used for setting up another explosives manufacturing facility near its existing factory at Peddakandukur in Nalgonda district, about 60 km from here.

The company is currently acquiring the land required for the new Rs 25-crore manufacturing facility, which was expected to go on stream in two years' time.

PEL, which has five manufacturing units located in three different states in India, has established two joint ventures abroad for the manufacture of explosives and accessories.

The JVs, Premier Synthas in Turkey and Premier Georgia in Georgia, are ready to commence commercial production.

According to PEL's management, Indian explosives industry is fragmented with over 45 units having high production capacity and trying to compete with each other.

Consequently, for some exceptions like the year 2005-06, the prices of major items have been showing a downward trend. PEL is trying to counter the increasing competition by overseas ventures in countries where margins are better.