Re-orientation of business activities and introduction of new products helped Stone India Ltd, the Calcutta-based Gouri Prasad Goenka's Duncan Group company, to register good performance in recent years. The company, more or less, is performing well since 1994-95.
During the year 1997-98, Stone India's sales turnover increased by 24.13 per cent compared with 24 per cent in the previous year. In spite of the increase in operating cost owing to the introduction of a new strategy, the total expenditure of the company increased only by three per cent from that of the previous year. Stone India achieved this feat by better management of manufacturing and operating costs. All these reflected in the stabling of interest burden and decline in depreciation cost.
The company's better performance in sales turnover was mainly due to strategic market planning for its colour monitors and other products made for railways and defence. It has captured 50 per cent of the market share in loco valves. Stone India also enjoys nearly 44 per cent share of alternators and 33 per cent that of SAB brake regulator.
Not only in the domestic market, in the international market also the company has improved its performance considerably. Its export turnover increased by over 10 per cent during 1997-98. The company's international business now extends to South Africa and Mozambique besides Australia and Bangladesh.
All these have reflected in the bottomline of the company. During 1997-98, profit before tax increased nearly 29 per cent, while profit after tax recorded a 40 pert cent growth. These factors helped the company to improve its profitability ratios significantly.
Stone India's earning per share jumped to Rs 3.94 from Rs 2.13 in the previous year, net profit margin to sales increased from 6.34 per cent to 7.12 per cent, return on net worth raised from 7.06 per cent to 9.16 per cent, while return on capital employed elevated from 8.99 per cent to 10.51 per cent. The company declared a dividend of 17 per cent for 1997-98.
According to the managing director of Stone India, V K Kakkar, as a part of the restructuring of the company, the immovable properties at the erstwhile Instrument Cooling Fan Project at Salt Lake near Calcutta have been surrendered or disposed off and necessary adjustments have been made in the accounts of the company. The movable assets of the same project have been transferred to Taratalla works of Calcutta for continued use.
The company hopes to reduce the number of employees to 550 in the next two years from the existing 650 employees. It has also decided not to offer extension benefits to the employees due to retire.
Shrivardhan Goenka, the 23-year-old son of Gouri Prasad Goenka, is being inducted as whole-time director into the board of the company for five years with effect from November 25, 1997. Stone India will seek shareholders' approval for his appointment at the forthcoming annual general meeting scheduled for August 12. Prior to this, Shrivardhan was the general manager, co-ordination, in the company.
According to Kakkar, Stone India has set a sales target of Rs 100-crore in about two to three years from now. The company hopes that the environmental-friendly non-asbestos composition brake blocks for railway rolling stocks, developed in joint venture with Futuris Industrial Electronic Co Ltd of Australia, are likely to help it in a big way to achieve its future targets. The product has several advantages over the cast iron brake blocks which has been well accepted in the market.
Sales turnover of the company is also expected to get a boost from its new colour monitor. It has set up Rs 2.50-crore plant with an annual capacity of 30,000 monitors. To bring down manufacturing costs, the company has recently signed a memorandum of understanding with Chuntex Electronics of Taiwan for souring of components.
The West Bengal Industrial Development Corporation has sanctioned Rs 20 lakh for this project.
The company's colour monitor production increased from 197 monitors in 1996-97 to 1,725 monitors in 1997-98.
It executed colour monitor orders worth Rs 1.04 crore during the year. In the current year, Stone India expects to produce nearly 10,000 monitors.
Further, to achieve market strength, the company has developed 25 kw alternators, high-speed pentographs, panel brake system and starter generator.
The company is also developing roof-mounted AC package, bogie-mounted brake system, foot-mounted 18 kv alternator, brake system for concor, lock installation and oil priming pump for the railways and defence.
