Bombay Dyeing starts financial recast
By Pradeep Rane | 28 Mar 2002
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.
