The loss-making leather garment manufacturer, Namaste Exports, is hawking its real estate properties and unproductive manufacturing wings in Chennai and Bangalore in order to save the company from landing at the Board for Industrial and Financial Reconstructions (BIFR) doorstep.
The company, which once enjoyed the premier position in the leather industry, is now hiving off ``unproductive assets and selling them to mop up funds to avoid going sick.
``We are selling our prime properties in Bangalore hoping to mop up around Rs 15-20 crore from the sales, said the managing director of Namaste Exports, Narayan Bhatt.
The company is also selling its textiles and shoes division, the tanneries at Ranipet, Vaniyambadi and Chennai and other immovable properties.
Namaste, which had hired SBI Caps a month back to help in its restructuring programme, hopes to pump funds from its real estate properties into leather garments - its core business. ``Experts have told us to shut our other businesses and concentrate just on manufacturing leather garments, which is what we first started out doing as a company, Bhatt said.
According to the Centre for Monitoring Indian Economy (CMIE) studies, the companys loss has been attributed to the heavy investments made in a subsidiary company, Leather and Leather crafts Pvt Ltd. Namaste Exports, which ironically had won awards from state organisations and the Council for Leather Exports, has been notching up losses for the last two years.
The company, which boasts of an equity base of Rs 15 crore, has registered a net loss of Rs 39.28 crore in 1996-97, as against Rs 18.42 crore in 1995-96.
But, its strong reserve and surplus position of Rs 57.85 crore in 1995 has been eroded, as the company accumulated losses and began registering a negative growth.
Though Bhatt admits that the company has no reserves left, he denies its networth is negative and needs to be referred to the BIFR.
``We are not a BIFR case. We hope to turn the corner in the next 18 months, he declares. Stating Namastes poor performance to be an `industrial phenomenon, Bhatt claims the rising 10-20 per cent hike in raw leather compounded by the recession in the leather industry has hit its bottomline.
But, industry sources claim the companys slide started with its diversification to textiles and inability to control and monitor its large inventories. The CMIE study adds the prevailing steep cost of finance, ban on usage of dyes and chemicals in leather products, imports of raw materials, the closure of leather processing and tanning units and the recession in the industry worldwide for the last two years as reasons for Namastes slide.
According to the Council for Leather Exports analysis, the overall exports of leather and leather products during 1996-97 recorded a negative growth of 6.67 per cent in dollar terms. Exports dropped short of the fixed targets by touching a value of US$1,645 million (provisional) in 1996-97 as against US$1,763.44 million registered last year.
Namaste Exports, riding a high, had come out with a public issue quoting a premium of Rs 90 on June 24, 1993. The price of the scrip which touched Rs 310 in 1994, has tumbled drastically to Rs 4. Today, it is reigning at a sorry figure of Rs 3.80 and Rs 3.90.
