Coats Blames Levy As Profit Dips

Coats Viyella India Ltd, the Bangalore-based multinational, has threatened to shut its thread units if the government failed to something about the 'exorbitant and anomalous' excise duty structure.

The chairman of Coats Viyella, J M M Shaw, releasing the company's financial results for the last six months, said the high thread duty was affecting the company's profits.

The government slaps 23 per cent duty on thread, while wholesome fabric carries 12 per cent levy. Shaw felt that if the issue remains unresolved, the company could not afford to wait and continue to lose money. We will have to close down our factories if the government fails to take action. We cannot go on forever in this situation, he stated.

 

The thread units comprised about 35 per cent of the company's business, said Shaw. Moreover, the rewinders belonging to the unorganised sector were evading duty costing the company another Rs 15 crore in six months, he said.

The company's profits fell by over Rs 3 crore compared with the same period last year. Profit before tax for January-June 1995 was Rs 7.51 crore, while for the six months this year, the profit after tax slid to Rs 2.87 crore.

High interest rates increased their net finance charges by Rs 5 crore combined with power cuts in Tamil Nadu reduced sales by 10 per cent and depressed profits, Shaw added.

However, in the last six months, the company recorded a sales growth of 5 per cent and a 8 per cent hike in exports.

Gross sales jumped from Rs 427.47 crore for January-June last year to Rs 449.83 crore, and exports shot up from Rs 104 crore to Rs 112 crore.