Date:28/09/2006 URL: http://www.thehindubusinessline.com/2006/09/28/stories/2006092802940200.htm

Back Pennar Ind turns around, posts Rs 42-cr net

Our Bureau

Mumbai , Sept 27

Pennar Industries has recorded profit after tax of Rs 41.67 crore for the sixteen-month period ended July 31, compared to loss of Rs 4.81 crore in the 12-month period previously. Turnover increased by 31 per cent from Rs 370.07 crore to Rs 647.31 crore.

Mr Nrupender Rao, Chairman, attributed the turnaround to business and financial restructuring.

"The company was earlier only engaged in cold rolled steel production. We decided to move into value-added products."

Apart from cold rolled steel, Pennar Industries now manufactures components for white goods and the auto sector as well as rail coach components and crash guards.

Some portion of the debt was trimmed through a one-time settlement with banks under the corporate debt restructuring (CDR) scheme in early 2004.

In July 2006, the company pruned long-term debt a second time by inducting foreign investors Eight Capital of New York and Spinnaker Capital of London, who chipped in with Rs 122.4 crore against issue of convertible debentures.

With conversion after 18 months, Spinnaker and Eight Capital will together hold 27 per cent in Pennar Industries, while the promoters' stake will drop to 35 per cent from the current 44 per cent, officials said.

Explaining the rationale behind a 16-month accounting year, Mr Rao said: "We received the money and payments on July 27. So we closed the financial year on July 31."

The company is setting up its fourth manufacturing facility at a cost of Rs.25 crore at Chennai to produce value-added steel products and components for the auto sector. It will be operational by March 2007.

"Going forward, we plan to acquire auto component manufacturing companies both in the US and India," said Mr Rao.