Hindustan Files of Raymond turns sick

The Vijaypat Singhania-controlled Raymond group is referring Hindustan Files, two years after it was acquired from the A V Birla group, to the Board of Industrial & Financial Reconstruction (BIFR). The company has been declared a sick undertaking following an erosion in its net worth.

Hindustan Files incurred a loss of Rs 3.12 crore for the year ended March 31, 2004, leading to an accumulated loss of Rs 6.61 crore. This exceeded the company's net worth of Rs 3.77 crore.

The company's margins were under pressure in fiscal 2004 owing to rising prices of major inputs, such as steel, fuel and electricity, and lower sales realisations.

A senior Raymond group source said, "It is a legal requirement to report any sick company to the BIFR and we are in the process of making a reference of Hindustan Files to the BIFR. However, we do not have any plans to close the Kolkata unit."

Raymond also has a files and tools division under J K Files & Tools, which is the market leader in files segment in the domestic market and is one of the largest producers of files in the world.

This division registered a marginal increase in revenues to Rs 135 crore during 2003-04. An appreciating rupee and higher input prices of steel also put margins under pressure.

Meanwhile, growth in files business worldwide has been flat during the financial 2003-04. J K Files registered a marginal growth in the sales of files. However, drill sales volumes were up by 11 per cent. Exports also recorded an increase of over 7 per cent over the previous year 's volumes.

JK Files & Tools units are located at Thane, Ratnagiri, Chiplun in Maharashtra and Pithampur in Madhya Pradesh.

Raymond is targeting new markets especially China for revenue growth. To reduce the impact of margin pressure, the company is planning to introduce initiatives such as labour cost reduction and relocation of plants. As part of a group restructuring, Raymond has identified apparels, textiles, steel and files as its core businesses.