Higher input costs and sector recession have brought about steep erosion in the bottom line of leather major Mirza Tanners during fiscal 1996-97. The company has, nevertheless, stepped up dividend to 35 per cent on an increased capital.
The company has reported a lower profit after tax of Rs 5.70 crore, down Rs 1.58 crore from Rs 7.28 crore in fiscal 95-96. However, its turnover has increased by nearly 40 per cent from Rs 44.28 crore to Rs 61.58 crore.
Kuruvilla Kuriakose, executive director of the company, said the leather industry suffered from a steep recession in 1996 and Mirza could not pass on the increased costs to the consumer. "If we had made such an effort then the our customers would have passed orders to other smaller manufacturers," Kuriakose said.
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The input costs for imported raw material rose by about 20 per cent owing to countervailing duty which was not levied earlier.
Thus, gross profit at Rs 8.56 crore is only marginally higher than Rs 8.10 crore achieved in the last financial year. The company has decided to write off capital issue expenses of Rs 1.01 crore this year itself, rather then spread across five years, thus decreasing its tax liability under MAT. The depreciation is higher by Rs 35 lakh from what was paid last year. Provision for taxation at Rs 84 lakh compared with Rs 62 lakh in the previous fiscal due to MAT.
Dividend outgo is at Rs 1.60 crore. The company had declared a 1:1 bonus effective February 15, 97, enhancing the capital to Rs 8.14 crore from Rs 4.06 crore.
But this did not have much effect on the payout since the period covered for purpose of dividend is only of one-and-half months.