Kabra Extrusion Technik®Will thrive on pent-up demand Per capita consumption of polymers in the country is abysmally low, around 1.73 kg compared with 8.3 kg for China and the global average of 14.8 kg. This augurs well for the future of Kabra Extrusiontechnik (KET). The company manufactures single and twin-screw extruders, post-extrusion equipment, complete lines for PVC pipes, machinery for HDPE pipes.

Collaboration with the Germany-based Battenfield Extrusiontechnik, state-of- the-art plant and a pioneering status ensure KET, its share of the growing market pie.

KET, along with another group company Kolsite Industries, holds a 60 per cent market share in extrusion machineries. The balance is held by DGP Windsor. Despite increased supply of HDPE, PVC, Polypropylene and other plastics, and spiralling consumption of extruded plastic materials for packing anything from pan masala to shirts for exports, the flow of investments have waned.

The scrip, which slid from Rs 100 to Rs 40, seems to have bottomed out at this figure. Buy the share only after the second-half results are announced. Pent-up demand could push up sales and profits in 1997-98, and one could see the scrip bounce back to Rs 100 within the space of a year.

Grindwell Norton Smooth profits

Growth of the abrasive industry is intertwined with the overall industrial growth. All kinds of surface, be it an industrial product or a consumer durable, is smoothened with abrasives. These are used in machine tools on manufacturing lines (in bearings), cleaning surfaces (industrial equipment), precision grinding (machine tool), shaping, polishing and countless other applications. In short, no product can be manufactured without using abrasives. Grindwell Norton (GNL) is, therefore, on a good surface. GNL has a collaboration with Norton of USA, a pioneer and leader in abrasives with 130 plants across 28 countries. It has access to over 3 lakh types of bonded and coated abrasives made by the parent company. Bonded abrasives (like the polishing wheel) contribute 62 per cent of the sales, followed by coated abrasives (on flexible surfaces) with 15 per cent. Custom-engineered industrial ceramics contribute 22 per cent.

The abrasive industry is undergoing rapid changes, GNL is well geared to take advantage of it. The company is engineering customer's requirements and enjoys a technological edge over others.

GNL is at the frontiers of technology and its modern plant manufactures non-woven coated abrasives, where abrasives are embedded into non-woven material. According to Ravi Purushottam of GNL, the company is the only one in Asia to produce the material. It is also well set to tap the diamond polishing industry with its super abrasives.

The scrip currently is fully valued at Rs 160. Investors could buy it when it dips to Rs 125 on reaction.

Cochin Refineries Oil money

Cochin Refineries (CRL) is a pygmy compared with its giant cousin BPCL or HPCL in terms of sheer size. CRL has a 13 per cent market share in refining. It started as a joint venture between the government of India and Phillips Petroleum. The centre now holds 55 per cent, after it bought Phillips' stake in 1988.

CRL began with an installed capacity of 4.5 million tonnes per annum, which has been expanded to 7.5 million tonnes. Plans are afoot to hike the capacity to 10.5 million tonnes. CRL sells its products through IOC. The positive thing about CRL is its product-mix comprising 23 per cent light, 57 per cent middle and 14 per cent heavy distillates. The product profile is favourable, considering the higher demand growth in the middle and light distillates. Margins here are likely to be more in a decontrolled environment.

CRL has embarked on expansion plans, icluding power generation and crude pipeline. All these would be funded through internal accruals and debt. Net profit for 1996-97 declined to Rs 84 crore from Rs 111 crore in the previous year. Nevertheless, the company is expected to gain Rs 100 crore towards cost and margin for 1993-97. When the petroleum industry is unshackled, CRL will get a handsome gain.

The scrip, which has increased to Rs 140 from around Rs 125, is likely to touch Rs 200 in the next few weeks, and may appreciate further.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.