Andrew Yule Appoints I-Sec For Belting Arm Restructure

The company is believed to have plans to hive off its profit-making belting division soon. This may be either in the form of a sell-off or in the form of a joint venture, sources said.

The proposal is necessary to avoid falling into a Board for Industrial and Financial Reconstruction (BIFR) dragnet as the company has already incurred losses of Rs 10.5 crore up to August.

Andrew Yule closed 1995-96 with a sales turnover of Rs 286.02 crore against Rs 201.70 crore in 1994-95.

Net profit was Rs 17 lakh compared with a whopping loss of Rs 20.59 crore in 1994-95.

 

But with the company recording a net loss of around Rs 20 crore in 1994-95, its general reserves has already dipped to Rs 8.51 crore thereby substantially eroding its net worth.

The belting division is among Andrew Yule's best divisions and its performance improved considerably during the last fiscal when it was able to break-even.

The division had achieved a record production in SRF and steel cord beltings.

This division had faced a crisis of order during 1994-95 as implementation of projects in sectors in need of conveyor belts was deferred.

This was coupled up with steep hike in the prices of raw materials, particularly rubber and chemicals.

In 1995-96, the gross turnover of the belting division was Rs 85 crore.

However, its profitability suffered a decline of Rs 3,000 per metre on account of lower price realisation.

The division, which was set up in 1981, was expanded and modernised with the introduction of a steel cord belting division in 1985-86.The company's debt-equity ratio is almost 6:1, leading to a high interest burden.

Sources said that this had made operations difficult as the company has to bear an interest of Rs 29 crore, an increase of nearly Rs 25 per cent when compared with 1994-95.

The most affected unit is the electrical division which, in the current fiscal, is believed to have logged Rs 5 crore loss.

The profitability of the electrical division slid in the wake of dues from power utilities, which consume over 75 per cent of this division.

The division in a bid to restructure its marketing set-up has set up facilities of a an electronics product manufacturing unit with know-how from Omi Castlet of the United Kingdom.

The engineering division plagued with acute financial constraints and delayed payments by customers is one of the worst affected wings.