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Settlement with Purolite to dent profit at Thermax

Settlement with Purolite to dent profit at Thermax
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First Published: Wed, Feb 24 2010. 10 31 PM IST

Updated: Wed, Feb 24 2010. 10 31 PM IST
Thermax Ltd has settled a “trade secret litigation” with Purolite International Ltd for around Rs178 crore. The settlement, which is related to its ion exchange resin business in the US, led to a 2% drop in the company’s shares on Wednesday. In the past week, the company’s shares have fallen by 9.3%.
“We prefer to write off the entire amount this financial year (FY2009-10) and start on a clean slate next fiscal,” said Thermax managing director M.S. Unnikrishnan.
It would be provided as an extraordinary item after the profit before tax.
The annualized profit for the nine months till December stood at Rs317 crore, which means the settlement will make a large dent in this year’s reported profit.
But as far as the impact on cash flows are concerned, the impact won’t be as severe. Thermax will pay Purolite in four equal instalments—in April, July, October and December.
The settlement enhances the firm’s growth prospects since it will become co-owner of the said technology. The protracted legal battle since 2005 had otherwise hampered this business.
The order book has imp- roved considerably from Rs2,900 crore in April, to Rs5,233 crore currently. Still, it is less than twice the firm’s annual turnover, considerably less than its peers who have an order book of around three-four times the turnover.
Write to us at marktomarket@livemint.com
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First Published: Wed, Feb 24 2010. 10 31 PM IST