Declaration of a 10 per cent dividend and sale of the textiles unit for business consolidation purpose has sent the Standard Industries' scrip soaring on BSE. Within a span of seven trading sessions, the scrip has appreciated by over 81 per cent. From a low of Rs 3.30 on December 12, the scrip touched Rs 6 on December 22, accompanied by high daily volumes on the bourse. During the period under consideration, the volumes in the scrip has risen from an average 13,000 to 98,000.

After incurring a loss of Rs 5.18 crore for the year ended September 1996, the company took the decision to hive-off its textiles unit at Dewas. To cope with mounting losses, the unit was sold to S Kumars group for a consideration of Rs 17.4 crore and the sale proceeds are now being used for the modernisation project of its textiles unit in Mumbai.

After the completion of the modernisation plan, Standard's textiles production capacity will go up by 15 per cent. After expanding its chemicals division last year, this modernisation plan for textiles unit would give a boost to the company's bottomline. For the year ended September 1997, the company has declared a dividend of 10 per cent.

The 104 year old company has three divisions - textiles, chemicals and fabrics. On an equity base of Rs 39 crore, financial institutions including UTI and GIC hold 45.5 per cent stake and public holding stands at 24 per cent.

The share price of Pennar Aluminium (Palco) is also on the news that the company plans to hive-off its conductor division. On BSE, the scrip rose from Rs 1.50 to Rs 5.90 in just eight trading sessions (December 11 to December 22). The rise in the stock price has been mainly due to the approval received at the company's EGM for the board's proposal to hive off the conductor division in favour of two US companies.

The two US companies, South wire and View Group, would together hold a 74 per cent stake in the new company which will manage the conductor business. The remaining minority shares will be held by the Pennar group of companies. The sale of the conductor division to the new stake holders is for a consideration of Rs 21.9 crore, which will be used by the company to pay off some of its high cost debts.

With the hiving off of the conductor division, the strips division will be left with PALCO until it finds a joint venture partner for which it has already held talks with three international companies, including Reynolds. The company has also managed to show some improvement in its performance amidst difficult business conditions of recession and high interest cost. Net sales dipped from Rs 67.11 crore in the first half of fiscal 1997 to Rs 59.81 crore during the corresponding period of the present fiscal.

Although the company made a gross profit of Rs 6.52 crore as against a gross loss in the previous fiscal, it recorded a net loss of Rs 29.13 crore for the first six months of the current fiscal.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.