GMR Industries net up 36% at Rs 11crore

Board declares dividend of 15%; company chalks out plans for bio diesel foray

Following a significant drop in interest costs and borrowings, GMR Industries Limited, the manufacturing arm of the Rs 2,500-crore GMR group, has posted 36.2 per cent growth in net profit at Rs 11.09 crore for the financial year 2003-04.

The company, formerly known as GMR Technologies and Industries, had reported a net profit of Rs 8.14 crore in the year 2002-03.

The board of directors of the company, which met here today, announced a dividend of 15 per cent.

Though, the total income rose marginally by 1.72 per cent to Rs 289.10 crore from Rs 284.19 crore, the company saw the interest costs decline by 48.7 per cent from Rs 26.96 crore to Rs 13.83 crore.

The quantum of loans from banks and financial institutions, which was Rs 165 crore in March 2001, was brought down to Rs 92 crore by March 2004.

The company managed to convert most of the term loans and working capital into foreign currency loans at London Interbank Offered Rate Index (LIBOR) rate of 5.3 per cent as against domestic interest rates of 11-12 per cent.

K Narayana Rao, managing director of GMR Industries, said the improvement in performance was mainly due to debt restructuring and conversion of loans into foreign currency loans at LIBOR rates.

Apart from this, the company focussed on operational efficiency, laid thrust on exports, corporate governance practices and increased professionalism, he said.

Elaborating on the operational efficiency, he said the company had been taking energy conservation methods based on an energy audit carried out by Tata Energy and Resources Institute (Teri).

Stating that the outlook for all activities of the company was promising during the current financial year, he said turnover and net profit were expected to rise by 15 per cent and 25 per cent respectively.

Rao also said that the company was chalking out plans to foray into agri-related areas like bio diesel. It would not only grow jatropha and pongamia plants but also set up bio diesel plant.

On the company's change of name, he said: "The company has been rechristened GMR Industries Limited from GMR Technologies and Industries Limited to identify and align with its present line of activities and future plans."

The company is structured into five divisions "� sugar, co-generation, distillery, metallurgical and international trading.

On the future plans of the company, Rao said that the company would expand the cane crushing capacity of its sugar mill from the current 3,125 tonnes per day (tpd) to 5,000 tpd by 2007 with an investment of Rs 40 crore.

The company will raise Rs 16 crore soft loan at six per cent interest from the Sugar Development Fund (SDF), Rs 20 crore from banks and financial institutions. Internal accruals would account for the remaining Rs 4 crore.

The company is at present setting up a distillery to manufacture 40 kilo litres of ethanol a day at an investment of Rs 20 crore.

The company plans to source Rs 8 crore from the SDF, Rs 10 crore from Andhra Bank and raise Rs 2 crore internally to finance the project. The distillery will be operational by October this year.

The company also has a downstream project in the form of a cogeneration power plant with 16 mw. On the metallurgical division, Rao said that the ferro alloys plant, with a capacity of 25,000 tonnes, exported 75 per cent of its products to overseas customers. The exports touched the Rs 86 crore mark in 2003-04 as compared to Rs 26 crore in the year before.

The international trading division, which was originally set up to take care of export activities of the metallurgical division, has been turned into a full-fledged division.

It will explore export opportunities in various avenues where the group has its core competence. It will also diversify into import activities, Rao added.