Department heads and senior managers have been told in informal meetings that unnecessary expenditure should be cut drastically including travel and hotel bills. The move comes when the company is expected to post one of its worst-ever results for first six months of 1996-97. Profits are estimated to fall from Rs 105 crore in first six months of 1995-96 to only Rs 10 crore.
As per numbers worked out by a leading research unit, the company will break-even in first half after making a loss of Rs 3 crore in the second half of 1995-96. The second half is expected to be better with a small rise in di-methyl terepthalate (DMT) prices and lower paraxylene import costs. Turnover in first half is likely to range between Rs 400-450 crore against Rs 727.42 crore in first half last year.
Top Bombay Dyeing sources said cost-cutting is a regular, annual exercise and it is not new. We are one of the most efficient companies and have several measures to cut wasteful expenditure, they explained.
Other sources within the company say this year's exercise is different. All these years, the company has been making good money, and cost-cutting was one of the ways of improving efficiency. This year, the exercise is aimed specifically at boosting bottomline.
We were financially healthy last year so cost-cutting was not necessary to help bottomline. This year it's different, said one of the marketing managers.
As part of it, the company's DMT division started the exercise of benchmarking its performance with comparable global producers. Under this, the DMT division's operational, financial performance will be compared to plants similar in size, capacity and other operational parameters.
This helps in a big way. We will know where we are weak and where we can plug gaps, sources said.