Low Power Generation Hits Fort Gloster

After establishing its unit in 1884, Fort Gloster Industries Ltd began the manufacture of jute based products in 1889. The company set up its cable division in 1958 and started the production of electric wires and cables in technical collaboration with British Insulated Callenders Company Ltd, UK.

This made Fort Gloster Industries of the Calcutta-based G D Bangur group a pioneer in the Indian cable trade.

In the past the company had major interest in jute but after the demerger of its jute division in 1993, it has decided to focus on power cables.

By virtue of its ISO 9002 certificate, the company did well in domestic and international market in 1994-95 and 1995-96.

 

In 1995-96, sales turnover of the company improved by nearly 22 per cent due to good demand of its products and net profit increased by more than 70 per cent.

Subsequently, a slowdown in the user industry and lack of activities in power generation in the country, the company registered a negative growth in sales and profit in 1996-97. Sales turnover dropped by 7 per cent.

Despite a lower tax burden which dropped from Rs 2.02 crore to only Rs 70 lakh, net profit of the company witnessed a fall of nearly 27 per cent.

Hence, it is no wonder that profitability ratio of net profit to sales declined from 2.02 per cent to 1.59 per cent. Similarly, return on net worth fell from 21 per cent to 14 per cent and return to capital employed fell to 20 per cent from 26 per cent.

However, in view of the tight liquidity condition, it is not clear why has the company allowed sundry debtors to increase from Rs 35 crore to Rs 38.43 crore.

It is noteworthy that while the company failed to export any commodity in the previous financial year, in 1996-97 it exported commodities worth Rs 1.57 crore.

Most of the power cable manufacturers had expected a massive demand to materialise before the end of the Eighth Plan. In reality, generation of power in this period remained far behind the planned target.

Against a targeted figure of 40,000 mw which was later lowered to 30,538 mw in the revised estimates, only 17,668 mw was set up. This massive gap in target and actual achievement led the power cable industry towards recession.

In the Ninth Plan power generation is getting priority and so the cable manufacturers are expecting better days ahead.