For the last year, the drill pipes business alone grew 167 per cent in volume terms, and 176 per cent in revenue terms. For the first half of the current year, growth in revenues has been to the extent of 60 per cent on a YoY basis, though profit after tax has dipped marginally from Rs 1.8 crore in the previous half-year to Rs 1.7 crore. The major constraints for profits for OCTL in the recent past has been its interest cost, which also includes a componentpertaining to accumulated interest from earlier years, which has to be adjusted against future earnings. The company provided for Rs 2.3 crore in interest accrued in the earlier period during the second quarter, which brought down the PBT to that extent. If this charge was not taken into account, the PBT would have been higher by 130 per cent at Rs 4.33 crore, against the Rs 1.97 crore that it reported. But this kind of mutation is very likely to be the case in the future as well until all its funded interest is written off.

OCTL has taken full advantage of the restructuring of its loans, both fixed and working capital, and of the rescheduling of the outstanding interest payments. The company was weighed down with high leverage and high interest payments to such an extent that it was unable to generate a cash profit. The outstanding interest has since been converted into funded debt, and is being written off every year to the extent by which it is being repaid, which accounts for the additional charge toprofits in the current period.

The stock has begun to attract attention once again because of the improvement in its financial condition, and the fact that this performance holds out the hope of an improved balance sheet, especially since the accumulated losses continues to fall.

Floatglass India

The first-half results from Floatglass India were a substantial improvement over the beginning it made last year. The trend of improved realisations that began in the second half last year has picked up. The improvement in average realisations saw the company report an operating profit of Rs 15 crore on revenues of Rs 89 crore for the first half, a major improvement over the previous year.

However, net losses continue to mount, with an incremental loss of Rs 17.58 crore recorded for the current year so far (which is, however, lower than the Rs 25-crore loss recorded in the relevant period last year). It was very crucial for FGI to improve capacity utilisation and realisations, both of which it did.Unfortunately, a high proportion of its debt is in foreign currency, and to that extent, it took a loss on currency fluctutation of Rs 5.72 crore for the first half.

But there are numerous points in its favour. One, the obvious staying power of its main promoter, Asahi Float, which is keen to increase its stake in FGI. Two, the company is ideally suited to take advantage of a demand growth for floatglass. The market is still very nascent, and for the moment, floatglass only has premium applications, given the vast price difference between ordinary sheetglass and floatglass. This has made the retail market a reluctant one despite the benefits of using floatglass, like its strength and lower-than-normal thermal conductivity. Therefore, its marketing approach has been to develop bulk consumers like builders and automobile companies.

The viability of the company can be suspect only if the promoters abandon it, which is a remote possibility. The other floatglass manufacturers in India are in worse trouble thanFGI, for even now unscrupulous dealers sell some imported floatglass and some local production as an FGI product. For the moment, the export markets are also saturated with capacities, and there cannot be a viable route here. The stock has been witnessing some intermittent buying over the last couple of weeks, but at the same time, the stock is still hovering around its all-time low.