Delay In Project Eats Into Bsl Projections

The Bhilwara-based BSL Ltd, a part of the LNJ Bhilwara group of companies, went public in March last year with a public issue of 17,00,000 equity shares of Rs 10 each at a premium of Rs 100 per share. The stock closed at Rs 37.50 on Friday, September 6, 1996, on the Bombay Stock Exchange "" when it was last traded on the bourse.

The stock was traded at an average price of Rs 88 when 64,900 shares were traded in July 1995 and at Rs 35 in July 1996 with volumes hovering around 9,600 shares. The stock closed slightly higher on August 30 this year at Rs 37.70, with 4,942 shares changing hands.

 

According to the company's prospectus, the second phase of weaving expansion was to be completed by September 30, 1995, for which BSL had placed orders with a Swiss firm. According to Praveen Jain, company secretary, late shipment of the weaving machines resulted in an installation delay.

The company suffered owing to delay in shipment, which also resulted in timely implementation of the expansion and a squeeze in our profitability," he said. The company's annual report says that the textile market in general and the worsted market in particular have seen an unusual slump. The industry is burdened with excess supplies. When asked about the performance of the stock, Jain said that the company was hit by the minimum alternate tax (MAT) proposed in the Budget. The company has to shell out between Rs 30 to Rs 40 lakh as minimum alternate tax. The company raised capital last year to fund the Rs 51-crore project cost for expansion of manufacturing facilities. The company's annual report says that the company deployed the issue proceeds in acquiring capital assets.

The company's results for the financial year ended March 1995-96 indicate that it has registered a net profit of Rs 8.70 crore on gross sales of Rs 122.19 crore, as against the projected Rs 13.58 crore on gross sales of Rs 150.47 crore.