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Srikalahasthi Pipes, which makes ductile iron pipes used mostly for transporting water, has reported a 142 per cent rise in net profit for the quarter ended December 2014.
A sintering plant the company opened in January 2014 enabled it to use cheaper iron ore fines rather than lumps as raw material, thereby helping it maximise profit.
Falling prices of iron ore, coal and improvements in operating efficiency also helped.
In the quarter, the Electrosteel group company, formerly Lanco Industries, reported a ₹27.31 crore net profit, compared with ₹8.82 crore a year earlier.
Iron ore fines are some 40 per cent cheaper than lumps. A sintering plant compacts them into lumps so that they could be melted in blast furnaces. Srikalahasthi’s 1,000 tonnes a day sintering plant worked to full capacity in the December quarter.
Gouri Shankar Rathi, Director, Srikalahasthi Pipes, told Business Line that the company produced more of smaller diameter pipes, 100 mm to 300 mm, for which there is better demand and less competition.
On the NSE on Friday, the stock of Srikalahasthi Pipes closed at ₹90, slightly lower than the 52-week high of ₹93 that the share reached on Thursday. The 52-week low was ₹21.60 on February 3, 2013.
For the nine months ended December 2014, Srikalahasthi Pipes achieved a net profit of ₹52.55 crore, up from ₹22.09 crore in the same period of the previous year — a 137 per cent increase.
Joint ventureMeanwhile, Srikalahasthi Pipes has said it is seeking partners for a joint venture that could produce castings using the surplus liquid metal that the pipe manufacturing process leaves it with.
Surplus capacityToday, the company is left with a surplus of 100 tonnes a day.
However, a ₹425-crore expansion programme is on, to raise the capacity by 50,000 tonnes to 225,000 tonnes annually.
Once the expansion is over, the plant will be left with surplus liquid metal of 300 tonnes a day.
Further, the company has about 100 acres of surplus land on its premises.
Talks are on with some large industrial houses in Tamil Nadu for a joint venture to make castings, Rathi said.
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