Philips Turnover Peaks On Rise In Consumer Durables Sales
Philips India Ltd, the Calcutta-based electrical and electronic goods manufacturing company, recorded highest-ever sales turnover in the year ended December 31,1997. But it also incurred highest-ever loss in the same period.
According to the audited financial result for the year ended December 31, 1997, the company registered a near five per cent increase in sales turnover. Its net loss stood at over Rs 14 crore. The company recorded nearly a 12 per cent growth in profit before interest, depreciation and tax (PBIDT) in 1997.
The company recorded the record loss in spite of a near 19 per cent decline in interest burden and slight drop in depreciation. The loss was mainly due to provision for extra-ordinary items worth Rs 64.21 crore, which include charge on account of employees voluntary retirement scheme of Rs 57.13 crore, expenditure of Rs 8.8 crore towards glass and lamp manufacturing facility (which was shelved earlier), and Rs 1.72 crore from sale of investments.
Improvement in the second half performance helped the company recover from the damage in its bottomline. In the first half ended June 30, 1997, Philips sale turnover decline by nearly four per cent. But in the second half of 1997, increase in sales volume of consumer durables and the execution of some lighting contracts for refineries boosted the turnover and helped the company record an overall growth of nearly five per cent for 1997.
Against a loss of Rs 11.77 crore in the first six months of 1997, the company cut its losses to just Rs 2.37 crore in the second half. The profitability ratios of the company registered a decline in the year 1997 owing to the loss. Without the extraordinary item, the company would have made profits of about Rs 50 crore and consequently earning per share (EPS) would have raised to Rs 10.
In the coming years, the company has planned to introduce its global portfolio of products. It has also planned to increase black and white televisions and audio sales in rural markets. Philips has plans to hive off its glass shell, PCB plant in Loni and metal parts plants.
Philips has a range of products in the audio system segment. Its mono range begins at Rs 1,000 and the low-end portable stereo systems ranges between Rs 2,000-5000. The higher range products starts from Rs 7000 to Rs 32,000. Including the portable disc player, Phlips has about 50 to 60 products in the personal stereo range.
To compete with Akai and Videocon, the company recently introduced a low-end 21-inch colour televisions priced at around Rs 12,000. It has taken up aggressive marketing strategy which is likely to boost turnover in the next year. The lighting business of the company, which contributes to 30 per cent of its turnover, recorded a 20 per cent growth in 1997. Philips enjoys over 35 per cent market share in this segment.
To make operations more efficient, Philips recently shifted its vertical tubelighting unit from Kalwa in Maharashtra to Punjab Anands factory located in Mohali. Punjab Anand is an associate company of Philips Electronics NV, Holland. Fluorescent lamps will now be manufactured both at Mohali and at the Calcutta-based Electrical Lamp Manuf-acturing Industries - another subsidiary of Philips.