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GR Cables suffers huge networth erosion

C.R. Sukumar

HYDERABAD, Dec. 5

GR CABLES Ltd (GRCL), the Hyderabad-based Rs 73-crore ISO-9002 certified manufacturer of jelly-filled telecommunication cables, has registered an erosion of over 50 per cent in its networth for the year ended March 31, 2000.

Interestingly, the company posted a net profit for the fiscal year as against losses for the last few years. GRCL reported a post-tax profit of Rs 1.27 crore during 1999-2000 as against a net loss of Rs 6.82 crore on an equity of Rs 17.29 crore in the pr evious year.

The accumulated losses of the company by the fiscal-end stood at Rs 13.67 crore as against Rs 17.7 crore of its networth (Rs 17.29 of paid-up equity and Rs 40.05 lakh of reserves and surplus).

A GRCL official told Business Line that the company could not obtain orders during 1995-96 owing to a change in the tendering policy of the Department of Telecommunications (DoT), the company's sole customer. As the company got low quantity of orders dur ing 1996-97 and 1997-98, it had resulted in lower capacity utilisation.

Though the company obtained adequate orders for 1998-99, the entire order could not be executed before March 31, 1999, due to non-availability of adequate working capital and also delay in the release of funds by the banks. This was partly due to delay i n the placement of orders by the DoT in October 1998.

Meanwhile, with a view of improving its funds position and thereby its networth, the company recently issued 1.6 crore warrants convertible into equity shares at Rs 12 per share on a preferential allotment basis. As a result of conversion of these warran ts into equity shares, the networth of the company would improve by Rs 19.2 crore.

Despite registering over 50-per cent erosion in networth, the GRCL management is confident that various factors such as convergence of information and communication technologies, globalisation of Indian economy and the growing cable requirements of Bhara t Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) would substantially improve the company's operations and profitability position.

While the cable requirements of BSNL and MTNL have recorded over 15 per cent annual rate of growth of demand, the overall demand is expected to grow further with the entry of the private sector players in the country wide network coverage.

Meanwhile, aimed at substantially reducing its interest burden, the company has entered into a one-time settlement (OTS) with the Industrial Development Bank of India for Rs 12.56 crore and Unit Trust of India for Rs 2.73 crore. As a part of the OTS, the company was sanctioned a waiver of Rs 7.36 crore towards the interest, penal interest and overdue interest by the financial institutions.

As on March 31, 2000, GRCL had a total debt burden of Rs 37.26 crore, while it provided Rs 7.02 crore towards interest and finance charges for the last fiscal.