With a 2.5 mw turbo generator plant to be commissioned by September 1998 (to be run on the waste steam of the sulphuric acid plant), the company will be saving to the tune of Rs 5 crore per year.

For fiscal 1998, KCFL's net sales increased by 48 per cent to Rs 61.13 crore and net profit by 51 per cent to Rs 4.02 crore. At the current level of Rs 20, the KCFL scrip is trading at almost 50 per cent discount to its book value of Rs 39.68. However, the stock is thinly traded on the bourses. According to the company officials, low level of public holding is the main cause for illiquidity in this stock.

To part finance the expansionproject, the company had come out with a Rs 4.52 crore rights issue during March-April. Priced at Rs 30, the 1:2 rights offer also had two optionally detachable warrants with it. Since the offer was 50 per cent higher than the prevailing market price of Rs 20, the financial institutions, who had a 21 per cent stake in the company, renounced their rights fully. Subsequently, FIs' stake came down to 14 per cent. The promoters have picked up the additional equity and has hiked their stake to 68.5 per cent from the earlier 64.5 per cent. The public (including NRI) holding is at 17.5 per cent, up from 14.2 per cent.

Sailesh Khaitan, vice-chairman cum managing director, KCFL, however, says that seen differently, the offer premium was justified from two counts. One, for fiscal 1997, KCFL's book value per share was at Rs 28. Given the growth records of the company over the last few fiscals, the company's book value was scheduled to go up further (which effectively went up to Rs 39.66 in fiscal 1998).

Two, alongwith one equity share that was offered at Rs 30, the investors were also entitled to two warrants. According to the terms of conversion, they reserved the right to get two more equity shares against a further payment between Rs 20 and Rs 30. Discounted at the present value, each share was available for Rs 18. Hence, FIs' renouncement of their rights is actually a loss for them.

KCFL has an enviable track record - vis-a-vis capacity expansion, production and also turnover. Between fiscal 1994 and fiscal 1998, the company has successfully quadrupled its SSP capacity from 66,000 tpa to 2.64 lakh tpa. Together with this, capacity utilisation levels has always remained at more than 100 per cent level, the highest being 156 per cent in fiscal 1996. In fiscal 1998, it was at 133 per cent level.

During the period under consideration, KCFL's compounded annual growth rate (CAGR) of turnover was at 42 per cent, going up from Rs 12.68 crore in fiscal 1994 to the current level of Rs 51.71 crore. Gross profit CAGR wasat 84 per cent, up from Rs 51 lakh to Rs 5.81 crore. Net profit has grown from Rs 4.32 lakh in fiscal 1994 to the current level of Rs 4.02 crore. The EPS figure has gone up from 14 paise to Rs 13.13 and bookvalue from Rs 12.87 to Rs 39.68 during the said period.