Tea major Good-ricke Group Ltd has not made provisions of around Rs 14 crore in the accounts for 1997. This includes Rs 1.50 crore of doubtful debts relating to exports to Poland, tax liabilities of around Rs 8 crore, Rs 50 lakh of diminution in investments and the Rs 3.20-crore demand for interest by the West Bengal government.
D K Mehra, director, finance, said, "These are contingent liabilities and we have not made provision for this as a normal practice."
Goodricke has made provision for Rs 5.19 crore against a doubtful recovery of debt of Rs 6.68 crore.
This was done in view of a long drawn legal process on certain claims for a breach of contract relating to the company's export sales in Poland in earlier years . The matter is subject to legal proceedings in India and Poland.
The West Bengal government's demanded an interest of Rs 3.20 crore on account of rural employment cess and primary education cess which is subjudice in the Calcutta High Court.
The state government has raised the demand under the West Bengal Taxation Laws (Second Amendment) Act, 1989, in respect of rural employment cess with effect from April 1, 1981 and primary education cess with effect from April 1, 1984. Goodricke has filed a claim for interest of Rs 3.33 crore from the state government on account of the above mentioned cess paid on the basis of the Acts of 1981 and 1984 since these Acts were struck down by the Supreme Court in May 1989.
The outcome of the company's challenge in the court is still awaited. While these problems remain to be resolved, the management faced one more snag this year as it had to declare a lock out in one of its tea gardens, Chalsa, at Dooars, with effect from January 7. However, both the Poland deal and the lock out have been qualified by the auditors. The company's cultivation, manufacturing, administrative and other expenses have shot up to Rs 102.12 crore in 97 from Rs 85.51 crore in 1996.
While production has remained stagnant at 17.5 million kg, earnings from exports have increased to Rs 23 crore from Rs 14 crore. Export revenue shows a growth of over 60 per cent and accounts for 16 per cent of the total turnover.
The company's net profit was Rs 11.41 crore in 1997 against Rs 3.28 crore in the previous year, while turnover registered a 21 per cent rise to Rs 146 crore from Rs 120 crore in 1996.
The board of directors has recommended a dividend of 20 per cent. According to S K Bhasin, managing director, Goodricke's aim is to reduce its dependence on banks and lower its interest burden in 1998.
The company expects that better liquidity will further boost its bottomline helping it give better return to shareholders in future.
