Electrolux accumulated loss exceeds net worth

The company posted a loss of Rs 25.96 crore during the quarter ended March

Electrolux Kelvinator Ltd's accumulated net loss as on March 31, 2004 has exceeded its combined net worth and the company is preparing to move relevant regulatory authorities for necessary reporting, a senior company official said.

The company might, however, not have to declare itself sick under the provisions of the BIFR as it had recently raised fresh resources to augment its net worth.

"The board had approved a rights issue of about Rs 200 crore in the ratio of eight shares for every seven shares held and the issue had opened for subscription by shareholders from March 26 to April 26, 2004," managing director Rajeev Karwal said, adding the issue will help in augmenting the company's net worth.

"The company's ability to continue is dependent on the financial support of AB Electrolux, Sweden which holds about 86 per cent stake," he said.

The company had reported a net loss of Rs 25.96 crore during the quarter ended March 31, 2004 against Rs 45.57 crore in the corresponding period of the previous fiscal. Its net loss during the financial year ended December, 2003 stood at Rs 226.31 crore against a paid-up equity capital of Rs 174.35 crore.

The losses were mainly owing to low capacity utilisation coupled with heavy spends on brand building and interest payment, he said.

Indicating that the AB Electrolux, Sweden will pump in fresh funds in India, Karwal said for all initiatives to yield a positive outcome will involve extensive outlay of funds as the company has been incurring losses and this trend is unlikely to reverse in the immediate future.

Meanwhile, during the first quarter of current year, the company's sales went up by 42 per cent in volume terms and 49 per cent value terms to Rs 97.56 crore from Rs 65.45 crore last year.

Other income also went up by 539 per cent to Rs 5.15 crore on account of write-back of certain liabilities provided in earlier years no longer required as also owing to recovery from certain bad and doubtful debts provided in earlier years.