Premier Explosives to hive off arm

Loss-making unit to be hived off into separate company called Premier Explochem

City-based Premier Explosives Limited is hiving off its loss-making unit at Godavarikhani into a separate company called Premier Explochem Limited and is making fresh investments into the company.

A N Gupta, vice-chairman and managing director of Premier Explosives Limited, told Business Standard that the company had embarked on a plan to revive the operations at Premier Explochem which is at present doing trial runs on small diameter explosives that the company manufactures.

"Premier Explosives has invested around Rs 2.5 crore in Premier Explochem for adding new infrastructure required to make these explosives. The commercial production would start from next month onwards," Gupta said.

"We expect to manufacture around 6,000 tonnes of the small diameter explosives during the current financial year as these explosives are in demand from the time the government banned the use of the Class-3 nitro glycerine based explosives," he added.

Apart from this, the company is also working on a Rs 8 crore contract from the Defence Research & Development Laboratory (DRDL) to manufacture solid propellant based pyrogen igniters. "The project got underway in May and the company has invested around Rs 1 crore in the infrastructure requirement for manufacturing the igniters," Gupta said.

The company for the financial year ended March 31, 2004, reported a 4.3 per cent dip in net sales at Rs 52.22 crore from Rs 54.58 crore it had achieved in the previous financial year. However, the net profit for the year recorded a growth and touched Rs 3.5 crore as compared to Rs 2.49 crore in the previous fiscal. The earning per share of the company increased from Re 0.03 to Rs 2.59.

The foods division of the company which produces, packages and sells mushrooms has also posted a profit of Rs 1.58 crore in the last fiscal. "This year, the division would contribute more to the overall turnover as the exports are slated to increase," Gupta said.

"We have got a contract valued at Rs 1 crore last month to deliver eight containers of mushroom to Israel. The realisation from exports is higher than the other orders and it is a Kosher certified product," Gupta said.

According to Gupta, Premier Explosives' turnover was expected to touch Rs 70 crore in the current financial year and exports, which were 20 per cent of the total turnover in the last fiscal, would contribute 25 per cent of the total sales this fiscal.

"We are also expecting a few more defence contracts which may be around Rs 2 crore and are also working on defence projects at Jagdalpur and a project with the Vikram Sarabhai Space Centre," Gupta added.