SUDAL INDUSTRIES Share price

SUDAL INDUSTRIES LIMITED is a company incorporated on 8thAugust 1979 in the state of Maharashtra with the mainobject of manufacturing Aluminium Extrusions and Alloys.The company''s unit with annual installed capacities ofmanufacturing 5900 MT of Aluminium Extrusions and 3000 MTof Aluminium Alloys is located on a lease hold land atMIDC Ambad Industrial Area Bombay Nasik Highway NasikMaharashtra. The Company''s plant was set up at a relativelylow capital cost the revalued figure of which issubstantially higher.The Company is engaged in the manufacture of variousAluminium Extrusions and has a well-equipped QualityControl Department and an R&D unit which is recognised bythe Ministry of Science and Technology Govt. of India. Thecompany commands a reputation of a producer of qualityproducts and has been supplying to Railways Road TransportAuthorities and giants/multinationals like BHEL TELCOLarson & Toubro Philips Siemens Mahindra & MahindraGodrej Bajaj Auto Crompton Greaves Asea Brown Boveri andKiirloskar Electrodyne etc. The Company''s products havefound acceptance in the international market and thecompany has exported to advanced countries like USA UKGermany and others. The company has also produced severalimport substitute items.The Company has already been awarded a Licence for theQuality Systems Certification in accordance with IS14002/ISO 9002 by the Bureau of Indian Standards.The Company commenced the commercial production in May1981 however could not perform satisfactorily owing toseveral reasons beyond the control of the management. It isimportant to note that the reasons for the Company''sunsatisfactory performance were common for most of theAluminium Extrusion Industry and almost all the companiesin the Industry were incurring losses.While stabilising the company''s production in 1981-82 and1982-83 the Company suffered a sever setback because ofthe inadequate availability of main raw material AluminiumIngots which was mainly because of the drastic power cutsfaced by the primary producers of Aluminium and inordinatedelay in importing Aluminium Ingots by MMTC the thenchannelising agency. Owing to the Govt''s restrictive importpolicy the quantities imported were also far less thanrequired for the smooth functioning of the industry. The supply position of Aluminium Ingots could improveduring the year 1986-87 when most of the primary producersof Aluminium set up facilities for power generation andNALCO also came into production. Consequently thecompany''s performance improved and company began postingprofits.During the period of just two years 1987-88 and 1988-89the ompany could recover 54% of the accumulated lossesincurred over the initial six years.This could not last longer and the company''s operationsreceived another setback this time because of thedecontrol of Aluminium prices leading to spiral increase inraw material pnces. This rise along with rise in the otherinput costs could not be passed on fully to the customers.The company has faced some labour problems intermittentlyupto June 1992 however there has been no closure of thecompany''s unit. The company has faced several litigationsin past but no litigation is pending except for 2 casesfiled by the company for recovertng its dues amounting toRs.2.88 lakhs. There are no defaults of statutory/institutional or bankers'' dues other than those underreschedulement in terms of BIFR Scheme the payment ofinterest on the dues to the Financial Institutions/Bankwhich will fall due until the commencement of theimplementation of the Scheme and an amount of Rs. 87.38lakhs (principal) overdue as per the BIFR Scheme.The company has been operating at low capacity utilisationof 36% 33% & 33% in case of extrusions during the years1991-921992-93 & 1993-94 respectively. During these yearsthe company has not produced Alloys.The above reasons coupled with inadequate availability ofworking capital under capacity utilisation and higherinterest & overhead burden resulted in company incurringlosses which stand at Rs.627.72 lacs as on 31st March1993. However the company''s losses incurred are amongst thelowest in the industry.As required under the applicable provisions of Sick Industrial Companies(Special provisions) Act 1985 the company''s proposal was referred toBIFR for rehabilitation.The Rehabilitation scheme has already been sanctioned by BIFR subjectto the Terms & Conditions mentioned under ''PRINCIPAL TERMS OFLOAN'' stated in the second part of this document. The majorconcessions available to the company in terms of the RehabilitationScheme are as under:MAJOR CONCESSIONSa) Waiver of Rs.140 lakhs towards interest penal interestand liquidated damages.b) Deferment in payment of 67% of principal and interestrepayable in 12 quarterly instalments starting from 15thAugust 1994.c) Conversion of existing funded interest of Rs.42 lakhsinto 10% Cummu lative Convertible Preference Shares (CCPS)with an option of prema lure redemption.d) Conversion of Irregularity of Rs.155 Iakhs BankBorrowing into Working Capital Term Loan repayable in 16quarterly instalments starting from third quarter of theyear 1994-95 and would carry interest @ 2.5% below minimumlending rate (MLR).The Company would also get exemption from Section 41(1) and43(B) of Income Tax Act 1961.During last three years the company has not made anycapital issue and there is therefore no investor complaintin respect of such issue.FAVOURABLE SCENARIO TODAY1. Because of the new found applications wideracceptability and higher exports of Aluminium extrusionsthe demand is expected to grow @ 11% per annum as per theWorking Group appointed by the Govt. of India. The Grouphas estimated the domestic demand 102000 MT in 1994-95besides the export demand of 10000 MT for the year. Thesaid demand is expected to be approximately 75% of theinstalled capacity in India against 52% in 1990-91.2. Because of the improved economic situation in thecountry several consumer industries which consumecompany''s products have come out of recession leading tobetter demand.3. Over the last 2 years the Excise duty and Sales Tax onAluminium Extrusions have been lowered from 40.25% and5.73% to 20% and 3.74% respectively.4. As a corollary to the above the sales realisation hasalso improved.5. Need-based working capital facilities are released bythe bank.6. Considerable waivers worth Rs.140 Lakhs being granted tothe Company under the rehabilitation scheme therebyreducing the company''s liabilities and recurring interestburden. Repayment has also been deferred.