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

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Diversifying from Sound Base

Diversifying from Sound Base Hansavivek GREAVES COTTON'S gross profit for the year ended June 1979 is lower than that of the previous year despite higher sales. This is because the 1977-78 profit fignre included the one time profit on sale of Mather Greaves shares and disposal of cone plant machinery totalling Rs 35 lakhs. Thus, the comparable figure of operational profit for the previous year was lower. In addition, the company had to incur considerable expenditure during 1978-79 in setting up a country-wide sales organisation under the Lombardini division, which is expected to pay dividends in future years. Furthermore, the company decided not to charge interest on its loan to Greaves Lombardini, in which it has ft vital stake and which has been experiencing financial stringency. Profit after tax is lower and the dividend raised by a point to 13 per cent is covered twofold against 3.09 times previously. The Greavestool division has made substantial contribution to the overall results. It will shortly take up for manufacture prototypes of heavyduty diamond core drills in technical collaboration with Diamant Boart of Belgium. Greaves light engineering division has shown some improvement in productivity and has reached the break even point. The rock bit manufacturing plant at Nasik also improved its performance and has extended marketing of rock bits to mining and water well drilling and met increased requirements from the oilfield industry. Work of the division as well as rock bit manufacturing plant, however, came to a halt after mid-September last and the management declared a lockout from October 4. The current year's prospects for the Nasik units have thus become uncertain. The company's project division has secured, in conjunction with Aetna-Standard Engineering of USA, an order for, supply, erection and commissioning of one anneal and pickle line and one carlite coating line for pro cessing cold rolled grain oriented silicon steels at the Rourkek steel plant. Total value of the contract is Rs 11.4 crores, out of which the project division will arrange for engineering and supply of Indian portion of the equipment of approximately Rs 3 crores value. Among the associated companies, Greaves Foseco turned in lower profit despite higher sales on account of increases in costs, but Greaves Drons- field has shown improved results, Crompton Greaves showed all-round improvement in its operations and its diversification and expansion plans in the underdeveloped regions of Nasik and Ahmednagar in Maharashtra are in progress. New India Fisheries showed substantial improvement in its working, but Greaves Cotton sold the shareholding at a small profit to Vaz Forwarding of Bombay in view of the government policy restricting the scope of larger houses in deep sea fishing, INDO-BURMA PETROLEUM has turned out improved results for 1978- 79 with higher turnover and profits, although margins have narrowed. Dividend has been raised by a point to 13 The Week's Companies (Rs Lakhs) January 5, 1980 per cent, which is covered more than twice by earnings. A sum of Rs 25 lakhs has been ploughed back to the general reserve. The current year holds out promise of further fair improvement. Production at the industrial explosives plant at Korba has stabilised at "much higher" levels and the plant is expected to produce this year somewhat in excess of the licensed capacity. The second plant is due to be commissioned within the current fiscal year. Also, work is in progress for the installation of plant at Kudremukh, which will produce site-mixed slurry explosives in accordance with the contract for the supply of such explosives with Kudremukh Iron Ore. This will be the first ever such plant to be set up in India and the company hopes to put up similar plants at other major mining sites. The oil division achieved 13.44 per cent increase in sale of petroleum products during 178-79. The engineering division's turnover expanded from Rs 92 lakhs to Rs 215 lakhs. Efforts are continuing to improve the product design and widen the product range to secure a larger share of the high vacuum products market. Considering, the present state of affairs of Assam Silimanite and Shama Forge in which IBP has total investment of Rs 25 lakhs, the directors have revalued investments in these companies at a nominal amount with a corresponding reduction of about Rs 25 lakhs, in the investment depreciation reserve account. Among the subsidiaries, Balmer Lawrie has recorded impressive improvement in its operating results, despite a highly competitive market, without receiving pre ferential treatment on account of its being in the public sector. But Biecco Lawrie's financial results have again been very poor. It has since ceased to be a subsidiary from July 2, last, following allotment of 5,26,800 equity shares of Rs 10 each to the President of India. Bridge and Roof too ceased to be a subsidiary from December 1, 1978 for similar reason.

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