| ||Financial Year ended 31.03.2002 (Audited) ||Financial Year ended 31.03.2001 (Audited) |
Less: Excise Duty
|Profit before Depreciation & Tax ||146.28 ||147.25 |
|Depreciation & Amortisation ||73.54 ||73.08 |
|Profit before Tax and Exceptional Items ||72.74 ||74.17 |
|Exceptional Items (see below) ||1.33 ||- |
|Profit before Tax ||74.07 ||74.17 |
|Provision for Current Tax ||5.00 ||5.65 |
|Net Profit after Current Tax ||69.07 ||68.52 |
|Provision for Deferred Tax ||25.61 ||20.82* |
|Net Profit ||43.46 ||47.70 |
|Exceptional items || || |
|- Voluntary Retirement Cost at Textiles ||(-) 7.58 ||- |
|- Surplus on Sale of Assets under disposal ||8.91 ||- |
Though deferred tax has not been provided in the Audited Accounts of FY 01, as AS-22 was not applicable in that year, for the comparison purpose, figures are recasted.
Indian Rayon, a major Aditya Birla Group company, has reported a turnover of Rs.1552 crores for the year ended 31st March, 2002 which is marginally up by 2% as compared to Rs.1526 crores in the previous year. Exports stood at Rs.387 crores against Rs.397 crores in last year.
The Company has been able to maintain gross profit of Rs.146.28 crores (Rs.147.25 crores) and Profit before Tax at Rs.74.07 crores (Rs.74.17 crores) for the financial year 2002 despite the production loss on account of the illegal strike at its Rayon Division. The strike lasted from the 14th of November 2001 until the 20th of January 2002. The losses on this account have neutralised the impact of the improved operating performance of its various divisions. Insulators and Carbon Black in particular have reported marked improvements in profitability.
To ensure the company's competitiveness and its sustainable future, the company had to recourse to rightsizing of its operations. Consequently the company offered a VRS to 370 employees at its textile division at Rishra. This has cost Indian Rayon Rs.7.58 crores during the year. The impact of these factors has been partially off set by a surplus of Rs.8.91 crores generated through the substantial disposal of its Sea Water Magnesia plant.
The Board of Directors have recommended a dividend of 33% as compared to 30% paid in the previous year. The dividend will absorb Rs.19.76 crores.
A sectoral overview of the production, sales volume and turnover is as indicated:
|Products ||Unit ||FY 2002 ||FY 2001 |
|Production Volumes :- || || || |
|Viscose Filament Yarn ||MT ||12,253 ||15,496 |
|Carbon Black ||MT ||93,634 ||89,739 |
|Insulator ||MT ||25,277 ||25,665 |
|Sales Volume & Net Turnover ||Unit || |
| || || ||Rs.in Crs || ||Rs. In Crs. |
|Garments ||Nos. (Lacs) ||66.9 ||350 ||58.8 ||326 |
|Viscose Filament Yarn (VFY) ||MT ||12,812 ||205 ||15,326 ||226 |
|Carbon Black ||MT ||94,504 ||281 ||91,735 ||254 |
|Insulators ||MT ||25,183 ||197 ||25,691 ||184 |
|Textiles || ||- ||307 ||- ||341 |
Madura Garments has recorded a turnover of Rs.350 crores, up by 7%. Exports revenue at Rs.50 crores vis-à-vis Rs.35 crores in the previous year soared by 44%. The volume of shirts and trousers rose by 14% compared to the earlier year. Operating margins before advertising expenses have been maintained at 18.5%.
For Madura Garments, the year has been extremely challenging. The acute economic slow down, the plunge in consumer spending, the unexpected excise duty imposition and the intense discount competition in the market particularly in the last quarter to liquidate stocks, have collectively put the division's profitability under pressure. In view of the market conditions, special sales promotion and advertising spends have gone up substantially, affecting the profitability. The fire at one of the main warehouses just before the peak season for the division was a setback as well.
All of its key brands - Louis Phillipe, Van Heusen, Allen Solly and Peter England continue to grow and extend their leadership position. Madura Garments successfully launched Peter England Trousers, Allen Solly women-wear in Bangalore and Hyderabad, the Louis Phillipe Club Line and the premium "international traveller", world-wide range from Van Heusen. The new suit manufacturing facility set up with Italian technical support is now operational. World class quality suits and Jackets will be made available in the Louis Phillipe and Van Heusen brands. These new products show high promise for the future.
To ensure sustainable growth in revenues and earnings Madura Garments will concentrate on leveraging its brand equity optimally to bolster its market presence even further. To bring in enhanced profitability, efficiency improvement and cost reduction will also be ongoing measures.
The long term outlook for Madura Garments continues to be positive due to the fundamental shift from tailored clothes to readymade apparel. However the immediate outlook is dependent on the revival of the economy in the country and in the Middle East, which is its major branded export market.
Consequent to the labour strike as explained earlier, Rayon Division's performance was severely constrained. Viscose Filament Yarn production at 12,253 MT is lower by 21%. Sales volume at 12,812 MT reflects a fall at 16%. On the positive side aggressive marketing combined with entry into new market segments, helped exports of Rs. 33 crores, as compared to Rs. 30 crores in the earlier year. Realisations at Rs.160 per kg. have risen by 8%, due to the reduced supplies in the market. Operating efficiencies were further optimised during the year. However, the blow-down / start up losses during the strike period adversely affected the consumption ratios. Operations have been stabilised with highest quality levels being recorded in March 2002.
A world-wide rationalisation of capacities and closure of plants in Europe, Japan and Korea augurs well for growth on the export front. In India, matured demand and cheaper product substitutes pose a challenge. To sustain its leadership position, the division will aggressively exploit export opportunities and foray into value added new markets. Alongside raising its product quality and providing superior customer support services continue. Against this backdrop, the outlook for VFY is positive.
CARBON BLACK DIVISION
The Carbon Black division's turnover at Rs.281 crores, an increase of 10% over that of Rs.254 crores achieved in the previous year, is indeed impressive. The division picked up sales after the first two difficult quarters. Realisations were up by 7% at Rs.29681 per ton. Aggressive marketing efforts, leading to a successful penetration in new Asian markets and the locational advantage afforded by its Chennai Plant led to a 31% surge in export at Rs.41 crores.
The division continues to operate in a very stressful environment due to the recession in the automobile sector and in the replacement tyre market too. The division is increasingly working towards reduced dependence on the automobile sector and expansion of markets especially in the non-tyre segments. While channelising its energies for the development of new applications for Carbon Black, it is concentrating on exports for better volumes. Introduction of speciality grades of value added carbon black products are on the anvil. Simultaneously cost reduction through tightening of consumption norms, lowering of distribution costs through superior logistics and better operating efficiencies should stoke the growth of this sector. The long term outlook is encouraging.
The Insulator division's performance continues to be commendable. Renewed product mix with a sharp focus on higher value added equipment porcelain, improved yield and relentless cost saving initiatives have boosted its revenues and earnings. Sales at Rs.197 crores have increased by 7% compared to Rs. 184 crores in the previous year. Sales volume at 25183 per ton has been maintained. Consequent to the shift in the product mix, production at 25277 tonnes was 2% lower compared to the last year (25665 tonnes). Realisation at Rs.78211 per ton is up by 9% compared to Rs.71480 per ton in the previous year. Exports at Rs. 87 crores are down by 9% (Rs. 96 crores) on account of the global recession and constraints faced in the power sector. However, the outlook for the insulator business seems promising, given the pronouncement of the government to meet the shortfall in the power sector in the 10th and 11th Plan and its intent to generate an additional 1 lac MW power by 2010.
The Textile division's turnover at Rs.307 crores as against Rs.341 crores has decreased by 10% mainly due to the right sizing of fabric operations and suspension of the Hosepipe business. Export declined by 14% as well. Due to the global recession in the Textile sector and higher input cost for flax and worsted yarn, operating profit margins have declined from 13% to 10%.
To sustain its performance, the division has taken several steps for cost control such as, VRS, reduction in energy cost, etc. The division has successfully implemented VRS and reduced 370 employees entailing a cost of Rs.7.58 crores. The division is focusing on the business of wool processing, value added yarns and flax fabrics where the Company enjoys a niche market.
Though the year has been extremely difficult for Indian Rayon, the company does look to better growth prospects in future. This growth will be fuelled by five factors, viz.,
-- through improved revenues and profitability of its garment business,
-- penetration of VFY into newer markets,
-- enhancement of revenues and profitability from its insulator divisions,
-- better performance of its Carbon Black division with value added products and new grades, and
-- benefits consequent to rightsizing of its textile division and modernisation of flax fabrics and worsted yarn operations.
Overall, the Company's outlook for the future is positive.