MUMBAI, Jan 30: Mannesmann Rexroth (India) Ltd, the Indian arm of the German engineering giant, will skip dividend in order to provide for foreign currency translation gains. The translation gains, derived because of appreciation of the rupee vis-a-vis the Deutsche Mark, has outstripped the company's operating profits for the year ended December 1997."The company has to pay income tax on these gains in an amount which exceeds the profit generated by operations. Accordingly, in order to conserve cash and reduce company's borrowings, the directors do not recommend payment of dividend for the year," stated a company release.
The translation gains, amounting to Rs 81.49 lakh, has come at a very crucial stage with the company's operating margins under "continuous pressure" due to direct imports by customers, rise in input costs, and severe competition from domestic players.
For the year ended December 31, 1997, the company recorded net sales at Rs 43.88 crore against Rs 45.79 crore during the previouscorresponding period.
Other income at Rs 3.32 crore was marginally higher than Rs 3.15 crore.
The company's gross profits (after interest but before depreciation and taxation), however, increased to Rs 2.51 crore from Rs 1.53 crore last year.
The company registered a net profit of Rs 73.81 lakh during the year, as against a loss of Rs 9.67 lakh in 1996.
In an effort to beat the sluggish growth in the capital goods sector, the firm has taken up value engineering of its products and reorganisation of its manufacturing operations. "The company is also looking at all the areas of operations to find out ways and means to reduce costs and improve margins," the release states.
The company has faltered to meet its net profit projections made in its letter of offer for the rights issue in 1995. The implementation of the company's 100 per cent export oriented unit has also been delayed due to "the delay in receipt of imported equipment and finalisation of technical details of the product." The unit hascommenced production in September last year.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
