Southern Petrochemical Industries Corporation Ltd (Spic), the flagship company of the M A Chidambaram group, has reported a net loss of Rs 39.51 crore on a turnover of Rs 241.15 crore for the three months ended June 30, 2001, (its first quarter) as against a net loss of Rs 18.85 crore on a turnover of Rs 369.20 crore for the corresponding period of last year.
The company attributed the higher net loss to the slack agricultural sector performance and the shut-down of ammonia and urea plants during May and June, 2001. It stated that, with the expected announcements of concession rates for phosphatic fertilisers, sales would increase in the subsequent quarters.
Of the total expenditure of Rs 214.64 crore (Rs 325.72 crore) in the quarter ended June 30, 2001, consumption of raw material accounted for Rs 97.48 crore (Rs 206.23 crore), purchase of finished goods Rs 49.61 crore (Rs 109.37 crore), power and fuel charges Rs 32.77 crore (Rs 83.57 crore) and staff costs Rs 17.93 crore (Rs 19.77 crore).
Interest and depreciation charges during the same period were Rs 55.22 crore (Rs 49.79 crore) and Rs 10.79 crore (Rs 12.55 crore), respectively.
To implement AS-16 from this fiscal
Spic has decided to implement the Accounting Standard (AS)- 16 on borrowing costs from the current fiscal. The move, which disallows capitalising borrowing costs, is likely to hit the company's bottomline.
Spic's auditors in their report have stated that borrowing costs on advances given to a company promoted by it and subsequently adjusted against equity issued by that company amounted to Rs 57.62 crore during the fiscal ended March 31, 2001.
They further stated that had these amounts treated as per AS-16, which has become mandatory from April 1, 2000, the financial charges for the company would have been higher and net profit lower.
Spic earned a net profit of Rs 15.87 crore on a turnover of Rs 2291.49 crore for the year ended March 31, 2001. Thus, had Rs 57.62 not capitalised, the net profit would have been negative.
Company officials, at the annual general meeting today, said the treatment was in accordance with the policy followed by the company over the years, adding that such treatment was allowable under US GAAP.
In the AGM, shareholders gave their approval to invest Rs 16.15 crore, being the additional capital requirement to meet the increased project cost in Spic Fertilizers and Chemicals Ltd, Mauritius, and Rs 8.23 crore in Gulf Spic Bahrain as equity contribution for the venture.
