Pal-Peugeot Runs Up Losses Of Rs 147cr

Automobiles major PAL-Peugeot has suffered an erosion of more than 50 per cent of its net worth after running up losses of about Rs 67 crore for the first six months ended March 31, 1997. The companys accumulated losses have thus soared to Rs 147 crore, against its total net worth of Rs 261.97 crore.

Unless the losses are capitalised immediately, the joint venture between Premier Automobiles and Automobiles Peugeot of France will have to be referred to the Board for Industrial and Financial Reconstruction (BIFR).

However, the Doshis and Peugeot failed to resolve their differences over the French companys proposal to increase its stake in the joint venture at yesterdays board meeting. While Peugot holds a 34.49 per cent stake in the joint venture, the Indian promoters hold 34.49 per cent, institutional holdings stand at 6.71 per cent and the rest is held by the public.

 

Company sources said no decision had been taken about a change in the companys equity pattern. The first-half results were announced here after the board meeting. Although net sales rose five per cent to Rs 172.7 crore, higher interest and depreciation costs, and a fall in other income, caused losses to more than double from the Rs 31.38 crore posted for the corresponding period in the previous year.

Total expenditure rose to Rs 208.72 crore from Rs 195.48 crore, while interest costs touched Rs 26.26 crore, compared with Rs 6.05 crore. Depreciation also shot up to Rs 10.91 crore from Rs 5.34 crore.

PAL-Peugeot posted a total loss of Rs 97.44 crore for the full 15-month period ending September 30, 1996. The company offset some of the losses from the previous years profit of Rs 24.34 crore, and carried forward the reduced loss of Rs 79.24 crore to the balance-sheet.

With losses mounting to Rs 67 crore in the first six months of the new financial year, the total accumulated losses have risen to Rs 147 crore.

The board attributed the companys poor performance to labour unrest, which forced the companys plant at Kalyan to remain closed for about a month in October 1996.

The passenger car market has become extremely competitive and price-sensitive. Consequently, the increase in the cost of the car cannot be passed on to the customer, the board felt. The only way to counter the adverse market condition would be to reduce cost. This is being done through accelerated increase of local content, which is expected to be around 55 per cent in the future, against 23 per cent which prevailed during the period under review, the board added.