Companies: NXR ��

Norcros, which owns the Triton Showers and Johnson Tiles brands, is suffering from reduced demand, increased costs and unfavourable currency movements – but looks ripe for a takeover.

Burdened by debt, Norcros sold its share of an Indian joint venture to its project partner HRJ for cash proceeds of �3.7m in July, though this still left gearing levels at an uncomfortable 77% at the September half-year. After seeing profits slide 31% to �4.2m on sales down 7% to �78.6m, the board has cancelled the interim dividend and introduced measures to reduce costs by �2.5m a year.

On the upside, HRJ has been steadily picking up shares in the company and has now accumulated a 29.33% ownership. Mumbai-based HRJ is owned by Rajan Raheja, a dollar billionaire who has made his money in property but now has interests in everything from magazines to batteries, cement and petrochemicals.

Cheshire-based Norcros, which Growth Company Investor recommended avoiding in February at over five times the current price, has seen its market value decline by 90% since its July 2007 return to the Official List (having been taken private) via a �120m fundraising. However, at current levels, the shares are trading below the value of the group’s assets, which independent broker FinnCap calculates are currently worth 24p per share, after stripping out goodwill.

With a bid looking possible, the shares could repay a gamble, while the risk-averse should steer very clear.

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