Bombay Dyeing starts financial recast

Mumbai: Bombay Dyeing and Manufacturing Company Ltd has initiated a financial restructuring plan to enable the company to improve its shareholder value through improvement in future profitability.

According to the plan approved by the board of directors of the company, Bombay Dyeing proposes to utilise an amount not exceeding Rs 186 crore out of the balance standing in the securities premium account for the adjustment of doubtful receivables and diminution in the value of certain financial investments in equity-linked mutual funds.

The company says the move is part of an overall restructuring plan to enhance its shareholder value through improvement in future profitability, a consequent increase in earnings per share and the return on the capital employed. The proposed initiative will enable Bombay Dyeing to reflect better the operational efficiency improvements in the future years and the true shareholder value. The proposal is subject to the approval of the company shareholders and the Bombay High Court.

Bombay Dyeing had posted a net loss of Rs 22.9 crore for the quarter ended 31 December 2001, in comparison to a net loss of Rs 11.7 crore for the same period last year. Net sales and income from operations is at Rs 201.6 crore in DQ-01, as against Rs 200.6 crore in DQ-00. The other income for the quarter ended 31 December 2001 is at Rs 7.9 crore as compared to Rs 9.6 crore in the quarter ended 31 December 2000.

The company has reported that following the 9/11 happenings prices of Asian polyester intermediates (paraxylene, DMT and PTA) recorded a steep fall. As a result domestic PTA/DMT prices during the quarter dropped as much as 25 per cent. Consequently, the inventories have had to be written down to the extent of Rs 164.50 million to reflect the ruling pries as at the end of the quarter. This has adversely affected the financial results of the division.

Recession in the US economy a major export market for Bombay Dyeing resulted in lower prices of fabrics during the quarter and a squeeze on the margins. The domestic market for textiles was characterised by a lower consumer demand, affecting the off-take. Cotton prices in India are currently below international prices and the lower raw material costs are expected to favourably impact the fourth quarter results of the textile division.