Profits under Squeeze

Profits under Squeeze HINDALCO INDUSTRIES, one of the largest manufacturers of aluminium, achieved an increase of 11 per cent in turnover during the year ended March 1991. Production of the metal improved from 1,30,787 tonnes to 1,39,762 tonnes. Capacity utilisation increased from 87 per cent in 1989-90 to 93 per cent. Production of rolled products and extruded products remained lower at 27,762 tonnes and 8,652 tonnes respectively compared to 28,787 tonnes and 10,000 tonnes respectively in the previous year. There was an improvement in the production of conductor redraw rods from 32,962 tonnes to 33,436 tonnes. The market for aluminium remained depressed despite price stability and adequate supplies. The non-allocation of adequate funds to energy, transportation and other sectors and increase in the central excise duty stunted the expected The Week's Companies normal growth in consumption of aluminium rolled products and extrusions. The value of production increased sharply by 12 per cent from Rs 467 crore to Rs 521 crore. Consumption of raw material which formed 34 per cent of value of production showed an increase of 19 per cent. Similarly, cost of power and fuel which formed 26 per cent of the value of production went up by 8 per cent. Operating profits improved by 23 per cent, but gross profits (profits before tax and depreciation) showed a growth of only 12 per cent and profits before tax rose by only 8 per cent. Despite a 111 per cent increase in tax saving investments such as units of the UTI and other bonds the tax provision went up by 24 per cent. This resulted in a growth of only 0,6 per cent in profits after tax. The company paid dividend at the rate of 30 per cent on share (Rs in lakh) capital of Rs 32.39 crore including the bonus issue of Rs 14.54 crore. As a result of the partial conversion of debentures, the equity capital increased by Rs 6.38 crore and reserves and surplus by Rs 63.81 crore. The company paid a dividend of 15 per cent on equity shares arising out of conversion of debentures.