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Saturday, June 27, 1998

Tata Honeywell shares fall on stagnant growth 

AG Krishnan  
The Tata Honeywell Limited (THL) scrip has been steadily declining from a high of Rs 72 in mid-April to around Rs 47 currently. This is not surprising considering that the company has reported stagnant results for the year ended March 31, 1998. A 5.9 per cent increase in total income to Rs 177.22 crore being one of the reasons. Moreover, operating margins have remained flat around the 9 per cent mark. Thanks mainly to the industrial slowdown and the uncertain economic environment, the company was unable to garner sizable new orders. Incidentally, the Industrial Automation and Control Systems business constitutes a major source of revenue contributing more than 70 per cent of its turnover. Owing to the retirement of debt, interest outflow has decreased by 20.85 per cent to Rs 6.26 crore. Commensurately, the bottomline has soared to Rs 5.37 crore from Rs 3.86 crore.

Recently the company has garnered orders worth Rs 90 crores from Haldia Petrochemicals (HPL) and Hindustan Petroleum Corporation Ltd (HPCL). TheHPL order for supplying Distributed Control Systems and Smart Transmitters to its turnkey contractors would pave the way for working with players like L&T, Technimont ICB and Toyo Engineering. The HPCL contract is a turnkey contract for the off-site automation of its Oil Movement and Storage (OM&S) systems at its Mahul refinery. The contract being for a running refinery would set a new industry trend in automation and control for the hydrocarbon processing industry. The OM&S systems market in the country is bound to grow to Rs 300 crore over the next few years. THL would be well advised to capitalise on this business opportunity as it would have a headstart in this area.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.


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