Indian Rayon’s commodity businesses struggle - Views on News from Equitymaster

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Indian Rayon’s commodity businesses struggle

Apr 20, 2000

Indian Rayon registered an 18.8% decline in turnover. This was primarily due to the fact that the cement division was hived of from the company (after five months of operations in the current year) and amalgamated with Grasim. While the company has declared a loss, this can be explained by the fact the that the unsold assets of the sea water magnesia division’s have been fully provided for. The company completed the takeover of the Madura Garments with effect from January 1st, 2000. This division contributed Rs 570 m in the quarter ended March 2000 and the company expects this business to contribute substantially to the turnover and the profits in the future.

(Rs m) FY1999 FY2000 Change
Sales 14,666 11,870 -19.1%
Other Income 944 521 -44.8%
Expenditure 12,383 10,338 -16.5%
Operating Profit (EBDIT) 2,283 1,532 -32.9%
Operating Profit Margin (%) 16% 13%  
Interest 1,166 742 -36.4%
Depreciation 907 725 -20.1%
Profit before Tax 1,154 586 -49.2%
Other Adjustments - (2,998) -
Tax 94 0 -
Profit after Tax/(Loss) 1,060 (2,412) -327.5%
Net profit margin (%) 7.2% -20.3%  

The company’s other divisions have however been struggling. While viscose filament yarn has seen volumes stagnate (and realisations decline) due to a subdued demand and competition from polyester filament yarn, the insulator division too has seen a decline in per tonne realisations. The carbon black division has not been pass on the 20% increase in feedstock prices (due to firm global prices).

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