Raymonds Profit Soars 377% To Rs 45 Crore

The net profit of the Vijaypat Singhania group flagship, Raymond's, has risen steeply by 377 per cent to Rs 45.02 crore on a 22 per cent increase in sales to Rs 1,192.95 crore.

The dividend pay-out has been increased to 15 per cent from 10 per cent. The main reason for this excellent performance is the substantial contribution from other income and considerable improvement in operating profit margins.

The other income jumped 106 per cent to Rs 32.33 crore, mainly through availing export benefit for majority of its products in lieu of the duty free advance licenses under duty entitlement passbook scheme to the tune of Rs 16.87 crore against Rs 1.37 crore in the previous year.

Until last year, the company had availed export benefits for its products in the form of duty free advance licences which were reflected by way of lower material cost. The operating margin has also shown a significant improvement by 2.33 percentage points to 17.12 per cent against 14.79 per cent last year. This is mainly due to the steep drop in its raw materials requirements, mainly wool and cotton.

However, the interest burden has increased by 21.24 per cent to Rs 101.75 crore against Rs 83.92 crore in the previous year.

Despite this, gross profit has increased by 76.57 per cent to 134.91 crore. Depreciation rose 28.5 per cent to Rs 84.59 crore against Rs 65.78 crore the previous year. As part of the restructuring exercise, the company has transferred its steel division to a separate joint venture with EBG Gesellschaft of the Thyssen group of Germany

The venture will be effective from July 1, 1998. According to the agreement, EBG Gesellschaft will hold a 74 per cent stake while the remaining 26 per cent will be held by Raymond's.

The fixed assets of its steel division will be transferred to the joint venture at a price of $106.5 million. In addition to this the joint venture will also pay in cash for the net current assets as valued on July 1, 1998.

The company was hit by the performance of its cement division located in Madhya Pradesh due to lower realisations.

Other businesses like file manufacturing and textiles have pulled the company out of trouble with their good performances.