Finolex Industries fell 5.7% to Rs 81.90 shortly before noon, after the company said its fiscal year's net profit plunged over 62%.
The stock of the electrical and telecom cables maker hit a low of Rs 79 earlier. A total of 3,162 Finolex Cables shares were traded on BSE in a little over an hour of trading.
The stock has witnessed a sustained fall over the last few months. From Rs 162.75 on 17 July 2002, the stock lost 52.7% in 8 ½ months to Rs 76.95 on 1 April 2003. The stock witnessed a recovery from that low but remained volatile (though within a band of Rs 80-90) in the last few days in the run up to the results.
The stock is a thinly traded one. Average daily volumes in the stock over the last year were 5,995 shares.
The poor off-take from state-owned telecom companies coupled with low prices hit the company's financial performance in FY 2002-03. Net sales fell 24% in FY 2002-03 to Rs 497.78 crore (Rs 4.97 billion) from Rs 658.98 crore (Rs 6.58 billion). Net profit plunged 62.5% to Rs 24.72 crore from Rs 65.95 crore.
The company's performance in FY 2002-03 was affected due to the substantial reduction in jelly-filled telecom cables by major local customers like BSNL. The lower prices of cables also hurt performance. BSNL placed orders for 15.4 LCKM during the year as against 40.68 LCKM in FY 2001-02.
The poor profitability of the telecom cables segment is evident in the results. On sales of Rs 160.41 crore (Rs 1.6 billion) of telecom cables in FY 2002-03, the company reported profit before interest and tax of Rs 1.04 crore. This was against corresponding figures of overall sales and profit of Rs 374.84 crore (Rs 3.74 billion) and Rs 43.43 crore, respectively.
Another concern is that an export order of telecom cables worth $15 million that the company received in January 2003 was delayed.
Finolex produces a variety of cables and is the pioneer in jelly-filled telephone cables. The company has a technical collaboration with Norddeutsche Seekable Werke, Germany, to manufacture hi-tech special submersible cables.
The company started operations with the manufacture of PVC insulated electrical cables for the automobile industry. Since then, it has constantly augmented its product range to include PVC insulated electrical wires and flame retardant low smoke electrical wires, PVC insulated single core and multi-core industrial flexible cables, PVC insulated winding wires and three-core flat cables, power and control cables, polythene insulated jelly-filled telephone cables, auto and battery cables, co-axial and CATV cables, LAN Cables, switchboard cables, fibre optic cables and others.
The company has manufacturing facilities at Pimpri and Urse in Pune as well as in Goa.
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