Raymond Limited has posted a net loss of Rs 1,500 m in 2QFY01 compared to a profit of Rs 498 m in 2QFY00. The loss is primarily on account of loss on sale of steel division, which the company sold to EBG India for a consideration of around Rs 3,870 m. Even if we exclude this loss, profits have declined by 48% to Rs 259 m. However, the results are not comparable since 2QFY00 sales includes contribution from both cement (sold to Lafarge India) as well as steel plant.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Diluted number of shares (m)
Diluted Earnings per share
Operating margins has fallen sharply from 22% in 1HFY00 to 15% in 1HFY01. Though interest cost has gone up by 5% in the second quarter, for 1HFY01, this has come down by 4%. The net margins are expected to show notable improvement since Raymond would receive more than Rs 11 bn as sales proceeds (Rs 4 bn for steel plant and Rs 7 bn for cement plant). If the company were to utilise this towards retiring its high cost debt, Raymond would become debt-free.
However, garment business is increasingly becoming competitive and prospects for both textiles and fabric division does not look promising. Therefore, we expect the company's topline to drop by as much as 30% for FY01.
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