Sluggish Trend May Be A Drag On Century Textiles
Century Textiles, the B K Birla group flagship, is expected to report flat growth for 1996-97 due to sluggish market conditions and lower price realisations in cement, one of the main businesses. The board is meeting in Mumbai today to finalise the results.
Sales is expected to touch Rs 1,800 crore from Rs 1,590 crore last year. Net profit is likely to be much lower than Rs 194 crore posted last year, though some analysts say if the company manages to reduce its interest outgo, profits could rise marginally.
For the first half, the company posted a poor performance. Net sales rose 18.3 per cent to Rs 941.83 crore. Other income fell to Rs 29.64 crore from Rs 40.94 crore, while net interest rose to Rs 78.35 crore from Rs 19.06 crore. Gross profit was down to Rs 97.93 crore from Rs 142.09 crore.
Net profit was down to Rs 34.18 crore from Rs 102.53 crore.
Century is a conglomerate with interests in cement, shipping, textiles and paper. Most of the businesses experienced downturns in 1996-97, especially cement, where Century is among the countrys top five cement producers.Since most of its cement capacity is in central India, Centurys realisations are likely to be down due to overcapacity. Since all its plants are located inland, the recent changes in import duty on coal is wont benefit to very much.
The companys transportation costs went up last year and due to the increase in freight costs announced in the July budget.
Centurys pulp and paper division produces rayon grade wood pulp and cultural paper. Rayon wood pulp prices have been falling this year and have slid to Rs 23,000 per tonne from over Rs 30,000 per tonne last year.
Though this will benefit the viscose filament yarn division, the profitability of the wood pulp division will be affected.
The company is expanding furiously in various businesses like paper and pig iron. Last year, it cleared the Rs 225 crore pig iron project in West Bengal to have a capacity of three lakh tonnes. It is also putting up three other paper projects in Punjab and Uttar Pradesh.
It will add another 3.6 lakh tonnes to Centurys current capacity.
The company shelved a planned $125 million GDR issue last year citing poor market conditions, so funding the new large projects will be a problem.