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

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Unscathed by Recession

Unscathed by Recession Hansavivek NATIONAL MACHINERY MANUFACTURERS achieved a 14 per cent increase in turnover in 1975 despite the recessionary trend and financial constraints that prevented the textile mill industry from investing in the machinery and plant necessary for replacement and modernisation. The situation was aggravated by limited availability of funds under IDBI's bill rediscounting .scheme. Even the machinery manufactured against agreed schedules was riot lifted in time by some mills. The resultant increases in inventory affected the company's operation adversely and gross profit was only slightly better than last year's. In fact, the profit has been inflated by about Rs 7 lakhs as a result of a change in the method of depreciation. Profit margins have thus been under severe pressure. In view of the increased need for additional finance, the directors have decided once again to skip payment to the shareholders. The company is also issuing 11 per cent redeemable preference shares, of the value of Rs 80 lakhs, to finance a part of the modernisation programme. With the capital base thus strengthened, it will be able to raise further borrowings from bankers and financial institutions. The company has been pursuing the programme for several years. In the past five years, it has installed new plant and machinery worth Rs 264 lakhs, and has invested Rs 120 lakhs on buildings and other fixed assets. The second phase of the programme is estimated to involve a further capital expenditure of Rs 205 lakhs, spread over the next five years. It is also proposed to spend about Rs 60 lakhs on the acquisition of fixed assets at Baroda to make the existing facilities reasonably balanced. The management intends to use the deferred payment facilities to purchase-' machinery wherever possible. Meanwhile, the borrowing limit is proposed to be increased, from Rs 40 crores to Rs 60 crores. Recalculation of depreciation in respect of fixed assets at Kalwe

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