Standard Industries To Sell Surat Textile Unit

Standard Industries (SIL), the Rs 417-crore Mafatlal Group company, plans to sell off one of its textile units located in Surat, Gujarat, for Rs 31 crore.

The company has sought shareholders permission for the proposed sale at an extra ordinary general meeting convened on September 8.

K J Pardiwalla, managing director, Standard Industries, was not available for comment on the price and the player buying out the unit.

The company also did not reply to a faxed questionnaire sent by Business Standard.

Apart from textile units, Standard Industries is also has a production facility for caustic soda at Thane near Mumbai. Besides it also has garment manufacturing units at Nadiad and Kutch in Gujarat.

 

In Mumbai, Standard Industries also has two textile units.

The company has undertaken a massive restructuring exercise in the last two years since both textile and alkali division's performance has been poor.

Of the four textile mills, it has already sold of one of its textile unit at Dewas to S Kumars Synfabs for a consideration of Rs 17.44 crore.

In the financial year ended September 1997, the company was mainly aided by the sale of its textile units and some other fixed assets which resulted in an other income of Rs 51.17 crore.

This helped the company to give a dividend pay-out of 10 per cent.

Mumbai-based analysts claim that the current fiscal will also witness a similar move where the company will utilise the sale proceeds of this Surat unit to pay dividend to its shareholders.

Analysts add that the company's performance will be under a cloud.

In the last two years, the caustic soda prices both in the domestic market as well as the international markets have been sluggish and have dropped by more than 30 per cent in the last year.

This division also faced problems with cost of production increasing steeply due to increased power tariffs by the Maharashtra State Electricity Board.

This has resulted in a sharp drop in operating margins for the division.