Poor realisations from its DMT and textiles divisions hit profitability at Bombay Dyeing, the Nusli Wadia group flagship.
Net profit fell 69 per cent to Rs 35.70 crore while net sales dropped 28.77 per cent to Rs 989.6 crore for 1996-97. The company paid no tax for the year, explaining that it held tax-free government bonds worth around Rs 140 crore. A dividend of Rs 3.5 per share has been declared.
A 39 per cent jump in other income, no tax provision and slightly lower interest costs enabled the company to keep its head above the water with a net profit of Rs 35.70 crore. In the first half, Bombay Dyeing had made a profit of Rs 22.35 crore on a turnover of Rs 457.09 crore.
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Profits were also helped by a change in accounting.
A provision of Rs 21.92 crore for premium payable on redemption of secured premium notes (SPN), in 1993-94 and 1994-95 have now been written back. Thus there has been an addition of Rs 21.92 crore in profitability.
Falling DMT prices, (currently at Rs 30,000 per tonne from Rs 64,000 per tonne in 1995), squeezed margins across the board. The DMT division's sales dipped to Rs 441.21 crore from Rs 858.54 crore.
Volumes expanded from 1.34 lakh tonnes to 1.43 lakh tonnes, but due to poor prices, the division suffered.
Textile exports rose 20 per cent from Rs 173.85 crore to Rs 208.16 crore. Bombay Dyeing has appointed Warwick University of the UK to restructure its textile division and the company says the Warwick programme will aim to achieve internationally competitive standards in all aspects of the company's operations.