ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Hit by Cost Increase

Hit by Cost Increase Hansavivek RAYMOND WOOLLEN MILLS has suffered contraction of margins during 1984-85. While turnover amounted to Rs 133.56 crore against Rs 98.66 crore in the previous year, gross profit increased comparatively modestly from Rs 12.02 crore to Rs 13.87 crore. What is more, even this profit includes incremental profit of Rs 2.38 crore arising as a result of changes in the method of accounting in respect of duty drawback, etc, on exports and in respect of machinery spares. The drop in profitability was caused mainly by disruption of the worsted textile operations and all round increases in costs, including a Very sharp' rise in packing material cost. Moreover, lower price realisation and continuing unremunerative prices of levy cement in the cement division, only partial operation of the new woollen plant at Jalgaon and increase in interest costs com- bined to erode margins. With depreciation claiming more, net profit is Rs 5.03 crore (Rs 4.30 crore). The unchanged dividend of 20 per cent is covered 2.75 times by earn ings as against 2.35 times previously.

Parent Company-Linked Expansion

Parent Company-Linked Expansion Hansavivek GENERAL ELECTRIC COMPANY OF INDIA is expanding its activities. It has concluded collaboration agreements with GEC Power Transformers, UK, for manufacture of 400 kv transformers and with Radyne, UK, for manufacture of medium frequency induction melting furnaces in the range 1

Problems of High Capital Cost Units

Problems of High Capital Cost Units. Hansavivek COROMANDEL FERTILISERS' results for the year ended March 1985 are not strictly comparable with those of the previous financial year which comprised 15 months. In the event, turnover has been higher at Rs 124.69 crore against Rs 108.72 crore, but gross profit has amounted to Rs 13,43 crore against Rs 15.30 crore after providing Rs 9.48 crore for interest on borrowings against only Rs 4.10 crore. With depreciation claiming as much as Rs 7.71 crore (Rs 4.24 crore), net profit is halved at Rs 5.47 crore from Rs 10.91 crore. Dividend has been lowered by 5 points to 20 per cent and is covered 1.73 times as against 2.84 times previously.

Getting Back from the Brink

Getting Back from the Brink? Hansavivek ALUMINIUM INDUSTRIES (ALIND) has shown a fresh net loss of Rs 7,87 crore in the year ended March 1985 as against Rs 6.43 crore in the previous year, although it could achieve a higher turnover of Rs 41.86 crore against Rs 29.70 crore. After some adjustments, the deficit carried forward has mounted up to Rs 14-69 crore to stand against share capital of Rs 3.54 crore and reserves of Rs 20 lakh. Dividends on preference as well as equity shares have been again skipped.

Preconditions for Liberal Imports

Preconditions for Liberal Imports Hansavivek POLYCHEM has received a letter of intent for a 2,000-tonne per annum polyvinyl alcohol plant to be built adjacent to its VAM plant at Nimbul near Pune. When established, this plant will substantially improve the capacity utilisation of the VAM plant and also reduce the imports of this high value product thus saving foreign exchange. Polyvinyl alcohol finds uses as sizing and coating agent in the textile and paper industries and also in making emulsions. The company's application under the Technical Development Fund Scheme is under consideration of the government for import of an improved technology for batch fermentation of molasses at the distillery for inducting more energy and cost efficient technology in the styrene plant. A development pilot plant, based on the technology developed by IIT, Bombay, is under construction for treating the spent wash effluent from the distillery. Besides reducing the BOD and COD values in the treated effluent, this treatment will generate methane gas which will be used as a fuel in the boilers. The company is yet to receive the approval of the government for increasing the capacity of ABS plant to 3,000 tonnes per annum under the regularisation scheme of the installed capacity. ABS plant is lately working at high rates of production in view of the increasing demand.

Making Power Pay

Making Power Pay Hansavivek TATA ELECTRIC COMPANIES are going ahead with their project of the second 500 MW unit for replacement of .the ageing unit nos 1, 2 and 3 and later no 4, which have been in active, continuous service for nearly three decades. The IBRD Joan agreement for US $ 135.4 million was signed in December last year and has become effective from July 31. The preliminary civil works for the project commenced from the beginning of this year and procurement of equipment for the 220 KV switchyard has been initiated. To ensure efficiency and reliability of supply and for transmitting power from this unit to South Bombay, the management has considered using 220 KV circuits with SF6 gas-insulated sub-stations at Carnac Receiving Station in South Bombay and a fibre optic communication system between Trombay and Carnac.

Multi-Faceted Expansion

Multi-Faceted Expansion Hansavivek INDIAN RAYON CORPORATION is seek ing an industrial licence to manufacture at Veraval in Gujarat 10,950 tonnes per annum of caustic soda as a backward integration in the manufacture of rayon yarn. The project will be based on the latest membrane cell technology. When completed, this will reduce the cost of caustic lye which is presently being purchased and transported from distant places. The company has also applied for permission to set up a plant to manufacture 20,000 tonnes of acrylic fibre at Nasik in Maharashtra. Meanwhile its application for an industrial licence for manufacture of tableware, sanitaryware and wall tiles is still pending with the government, though clearance under the MRTP Act has since been received. The company will soon take up implementation of the project for annual manufacture of 20,000 tonnes of carbon black in UP, for which it has recently received a letter of intent. It will also take up soon the project for the manufacture of lightning arrestors and condenser bushings. Clearance for the import of capital goods has been already received. The work on the plant for the manufacture of 80,000 tonnes per annum of white cement at Gotan at Nagaur district of Rajasthan is also expected to start soon. Detailed mining prospecting work has been completed and the technology for the plant is expected to be selected shortly.

Fertiliser Project in the Bag

Fertiliser Project in the Bag Hansavivek TATA CHEMICALS, at long last, has received the letter of intent and MRTP clearance for the gas-based nitrogenous fertiliser project to be located at Babrala in Badaun district of UP. The fertiliser complex will be capable of producing 1,350 tonnes of ammonia per day which will be used for the manufacture of 2,250 tonnes per day of urea. The project will be implemented by Tata Fertilisers, which is at present a 100 per cent subsidiary of the company but which will be spun off as a widely held public company in due course. The company, either by itself or, if found necessary, together with its shareholders, associates and friends, will subscribe, on the basis of current estimates and subject to the final approvals of the government agencies concerned, Rs 75 crore to the equity share capital of Tata Fertiliser. The company has turned in good working results for the year ended March 1985. The production of soda ash increased marginally by 2.5 per cent to a new high of 4,71,352 tonnes, representing a capacity utilisation of 94 per cent despite numerous handicaps. Pro duction of densified soda ash increased by 22 per cent to 1,38,360 tonnes and placed the company in a better position to cater to the requirements of the glass industry and other users of densified soda ash. The production of refined sodium bicarbonate increased by 18 per cent to a new high of 21,669 tonnes. The production of salt during the year crossed, for the first time, the one-million tonne mark and at 10,23,288 tonnes, registered an increase of 36 per cent over the previous year. Correspondingly, production of bromine also increased by 52 per cent to 549 tonnes. Production of vacuum salt increased by 28 per cent to a new high of 90,118 tonnes, of which 15,100 tonnes were iodised. Production of caustic soda marginally declined by about 3 per cent and of pure salt by about 37 per cent due to sluggish demand. The benzene hexachloride plant was shut down for a month for complete overhaul and check-up to ensure maximum environmental safety. Production of BHC also declined by about 2 per cent. The company has reported a gross profit of Rs 33,09 crore against Rs 31.97 crore in the previous year following increase in sales from Rs 105.16 crore to Rs 111.51 crore. These figures show a small decline in margins. With reduced provision for depreciation and a substantial saving in taxation, net profit has more than doubled from Rs 9.21 crore to Rs 20.97 crore. Unchanged dividend of 25 per cent on enlarged capital is covered 6.01 times by earnings as against 3.14 times previously.

Competition Getting Keener

Competition Getting Keener Hansavivek TATA OIL MILLS COMPANY'S Chairman, D S Seth, has announced his intention to step down, after the annual genera! meeting on August 29, as the Chairman and Director of the company "to be able to cope with numerous tasks and situations and to reduce some of my increasing burdens and responsibilities". It was in early 1973, recollects Seth, when J R D "Tata was still the Chairman that he was called upon to get more actively involved in the affairs of Tomco and, as Vice-Chairman, take over the leadership of the company. This was at a time when crippling losses, which threatened the very survival of Tomco, were seriously apprehended and the company's joint venture project in Malaysia, Unitata, was on the verge of being aborted. Later, in June 1982, when Tata insisted on stepping down as the Chairman, the board did Seth the honour of appointing him as the Chairman of the company in succession to Tata. Looking back, Seth derives some personal satisfac tion as not only the adverse trends were quickly arrested but the company registered record post-tax profits in four years and Unitata emerged as perhaps the country's most successful joint venture abroad. But for the strike in 1979 the company's progress would have been even more satisfying.

Modernisation Drive

Modernisation Drive Hansavivek TATA IRON AND STEEL COMPANY (TISCO) has drawn up a five-year plan of capital expenditure of about Rs 1,000 crore, a major part of which will be devoted to new facilities to maintain and improve its steel- making capability. This will enable it to rectify, after many years of neglect due to paucity of funds, some major deficiencies in its plant, such as the absence of a raw material yard and handling facilities, an additional sinter plant, more power generation, etc With the addition of the bar and rod mill and certain modifications to the existing mills, the management hopes to maintain production for some years to come at the highest levels of plant utilisation. The company has initiated steps to implement the letter of intent for expanding its saleable steel capacity from 1.74 million tonnes to 2.10 million tonnes per annum. The Joint Plant Committee (JPC) has sanctioned a loan of Rs 80 crore to the company out of the Steel Development Fund for financing the rupee requirements of some major projects under taken by it. These projects include schemes for modernisation of the facilities at the medium and light structural mills, improvement in infrastructural facilities such as a waste recycling plant, improvement of town services, etc. The company also proposes to approach the J PC for financial assistance of about Rs 300 crore to undertake other capital projects. The company has entered into an agreement with Korf of West Germany to set up a new company, subject to government approval, for the import of steelmaking technology which eliminates the use of coking coal and substantially reduces the necessity for power. At present, the size of such a production unit it restricted to about 3 lakh tonnes per annum, but it is hoped that higher tonnages might be possible in the near future. This will be a revolution in steelmaking in India and the future growth of the steel industry can be assured on a more viable basis.

Losing Battle against Rising Costs

Losing Battle against Rising Costs Hansavivek ESCORTS was able to achieve increased turnover in most of its products during 1984, but it had to fight a losing battle on the profitability front due to cost pressure on inputs. Moreover, profits were also affected by prolonged labour unrest at the Bangalore plant, and, the company's new projects of the floating dry dock at Bombay and 350 CC motor cycle, which are still going through the initial stabilisation period. The dry dock, owing to problems of port jurisdiction and environmental controls together with continuing recession in the shipping industry, was functional for only about 5 months in the year While the company's turnover increased from the previous year's Rs 253 crore to Rs 293 crore, gross profit declined from Rs 23.81 crore to Rs 21.71 crore. With both depreciation and the tax liability claiming more, net profit fell from Rs 14.12 crore to Rs. 8.67 crore. Dividend has been maintained at 22 per cent and is still covered 2.92 times by earnings as against 4.76 times previously. The piston assembly plant at Bangalore resumed working on February 12 last after a production linked settlement was signed.

Adding Another Dimension

Adding Another Dimension Hansavivek GWALIOR RAYON SILK MANUFACTURING (WEAVING) COMPANY proposes to further diversify into the fertiliser industry. It is seeking an industrial licence for setting up a gas based fertiliser plant for the manufacture of 4.5 lakh tonnes of ammonia and 7.5 lakh tonnes of urea per annum in UP. Meanwhile, the company has received offers from foreign technology sup- pliers for the sponge iron project. Further progress of the project depends on the clearance of matters of allocation and pricing of gas which are pending with the government. The construction work on the second cement unit for another half a million tonnes per annum is in progress and the erection work is expected to be completed by the first quarter of 1986. The clinkerisation plant of the first unit of half a million tonnes cement capacity was commissioned during 1984-85 in a record period of 18 months and about 3,000 tonnes of clinker was produced. The company has turned in good results for the year ended March 1985. It has earned a gross profit of Rs 28.41 crore on a turnover of Rs 380.57 crore against a profit of Rs 22.74 crore on turnover of Rs 318.27 crore in the previous year. These figures reflect increased gross margins. With provisions for depreciation claiming Rs 23.14 crore (Rs 12.65 crore) and tax liability Rs 55 lakh (nil), net profit has been halved to Rs 4.72 crore (Rs 10.09 crore). Equity dividend has been raised by 2 points to 22 per cent, which is slightly short earned as against an earnings cover of 2.25 times for the previous year's distribution. Sales of the viscose fibre divisions were 94,600 tonnes against 76,800 tonnes in the previous year. The offtake of Grasilene fibre was affected due to unrestricted imports and high incidence of excise duty. Production was only 4,960 tonnes i e, half the installed capacity. Production of pulp was also lower at 78,400 tonnes against 87,800 tonnes previously. The pulp plants at Mavoor and Harihar continue to face a serious shortage of pulp wood on account of non-fulfilment of their commitments by the state govern ments of Kerala and Karnataka. The Kama- taka government has finally agreed to a joint afforestation venture. A joint sector company along with Karnataka Forest Plantation Corporation has been formed for the purpose of raising plantations of suitable pulp wood species. In addition, a farm forestry project has also been taken up in that state with the assistance of N ABARD in an area of about 730 hectares. The farmers have already planted fast growing trees during monsoon of 1984. To assist these projects, the company has set up a Grasim Forest Research Institute at Kumarapatnam (Harihar) for developing nursery techniques and optimising the yield of wood. The directors point out that while the wood based industries in these states are facing serious raw material crisis, royalty on wood is being indiscriminately increased from time to time, the last one being made effective from April last. The incidence of royalties on pulp wood is perhaps the highest in the world.

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