Nelco
Nelco , after a long time, was in the news last week and the stock price saw a surprising spike up though currently, profit booking has once again come in and the stock is in the red. The rise in the stock price was on the back of the Board approval on 3rd April, for restructuring its Industrial Security & Surveillance Solutions business (ISSS business), by restricting operations and reducing expenditure with a view to minimize losses. However, the company will continue to focus on building its position in the Network Systems business. That’s all the news that was but the investor fancy was the stock was pretty high to react so positively. This company will always be remembered as the first company where Ratan Tata learned the ropes of running a company and that probably explains the fancy for the stock.
The company, over the past two years has been reinventing itself, and divested three of its businesses – it sold its industrial drives, SCADA and traction to Crompton Greaves. It did away with a lot of extra staff, roped in a new CEO and created an entirely new organizational structure. But it will take more than all this for this 70 year old to emerge out of the woods. The company had ended, like always, another quarter, Q3FY14 in the red. The only gratifying part was that the net loss was at Rs.3 crore, lower than Rs.4 crore loss in Q3FY13. Though its topline came in much lower, through lowering operating expenses, the company managed to show lower net loss. Its net loss as at 31st Dec 2013, stood at Rs.7 crore compared to Rs.17 crore loss for entire FY13.
Shareholding as at 31st March 2014 shows that promoters holding is at 50.10% of which Tata Power holds 48.64% and the balance by Aftaab Investments, a subsidiary of Tata Power. FII holding is at 3.81% or 8.7 lakh shares, held almost entirely (3.8%) by Schlumberger. The good part is that it has also managed to bring down its debt from around rs.53 crore to Rs.20 crore and that has reflected in the lower interest outgo. Yet, a lot remains to be done to get this company back into the black, beginning with increasing revenues and brining down costs.