July 11: Faced with dwindling margins and a worsening liquidity problem, the Jaipur Metals and Electricals Ltd. (JMEL) is passing through a difficult phase in its 52 years of existence. This is despite the fact that JMEL made history some years ago when it allowed its workers to hold 60 per cent of its equity (Rs. 2.89 crore).

The future may not seem to be very bright even though its new chairman and managing director, Vishnu Bahadur, a senior IAS officer, is making use of all possible avenues open to him. ``My biggest problem is of liquidity'' he declares.

Though the profit and loss account of the year ended March, has yet to be finalised there are indications that the net profit may not even be Rs. 1.25 crore as against Rs. 3.36 crore in the previous year. The sales turnover may also record a steep decline to Rs. 65 crore from Rs. 81.82 crore in the previous year.

For the current year too, JMEL, the country's most prestigious manufacturer of electric meters, conductors etc, may have to struggle to attain net profit at last year's level. This is due to the fact that the company is working on a low band of 3 to 4 per cent of margin.

``The market has become highly competitive with the entry of the unorganised sector in a big way. No doubt, the odds are heavy but still the show will go on,'' says Bahadur. JMEL has about 1800 employees with a monthly salary outgo of Rs. 75 lakhs.

Bahadur has stepped up his recovery campaign to improve the liquidity position. The total outstanding dues are around Rs.14 crore with the state electricity boards heading the list.

The poor liquidity position has forced JMEL to close its magnet division totally and, the capacity utilisation in other divisions is not even 50 per cent. ``Our overheads are naturally large,''Bahadur admits. In the absence of enough raw materials, production could not be taken up at higher levels.

The order position is quite comfortable, with total orders worth around Rs. 100 crore pending with the company for the supply of electric meters, conductors and overhead traction wire, grooved contact wire, catenary wire and copper strips to the Railways.

Bahadur says that JMEL could roll out one lakh electric meters in a month, including the improved version of electronic energy meters which cannot be tampered. But Bahadur's hands are tied as the money is not flowing into his coffers.

Last year JMEL made a big mistake when it gave electric meters worth Rs. 8.65 crore to the Rajasthan State Electricity Board on lease.As a result the company's cash flow position came under stress. The borrowings from IDBI are put at Rs. 6.50 crore and the fund-based account in some banks has become overdrawn from the existing sanction of Rs. 18 crore. ``We are trying our best to regularise the bank accounts,'' says Bahadur.

Increasing the production levels may not solve the problems of JMEL, as the margins have become very low. What is required is to reduce the cost of operations by upgrading the technology and improving productivity. ``We are not recruiting fresh staff,'' informs Bahadur.

Given Bahadur's tenancity things may improve, but there is no doubt that JMEL today stands at the cross-roads as internally its finances have become somewhat weak. The company's sundry debtors at the end of March stood at around Rs. 23 crore, with inventories at the level of around Rs. 17 crore.