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

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EPW Research Foundation LAKME Lost Russian Market DESPITE adverse conditions prevailing in both the domestic and international markets, Lakme, the leading cosmetics manufacturer from the house of Tatas, has been able to improve its profits in 1992-93 and maintain dividend at 50 per cent, the same as last year, While at home the government's liberalisation policies and various benefits announced in the 1992-93 budget were more than offset by the communal disturbances during the last quarter of the year, which is normally the peak period for cosmetics sales, the company's sales abroad were hit by political uncertainties and the consequent hyperinflation in the Russian economy, its largest international customer. As such, while domestic sales and operating profit declined by 3.3 per cent and 4.4 per cent, respectively, exports declined by a whopping 70 per cent. As a result, the company's subsidiary, Lakme Exports, witnessed a severe setback in profit after tax, which slipped from Rs 8.7 crore in 1991-92 to Rs 90 lakh in 1992-93. However, a steep decline in the company's interest burden and a much lower rise in depreciation provision enabled Lakme to post a 14.5 per cent increase in gross profit and revive its net profit by 13.8 per cent as against a decline of 11.8 per cent in the previous year. And during the first half of 1993-94, though sales have declined by a marginal 4 per cent over the corresponding half of the previous year, net profit has gone up from Rs 1.6 crore to Rs 2.5 crore.

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