The company has, in a press release, stated that the cement business was demerged to Grasim Industries. As the results of the corresponding quarter ended June 30, 1998, include the operations of the demerged cement business, these are not comparable with those of the quarter ended June 1999. The release adds that the results of the immediately preceding quarter ended March 1999 have been provided for comparison and do not include operations of the cement business.

As a result of the marginal increase in profit, earnings per share went to Rs 5.79 from Rs 5.73. Gross profit was Rs 29.42 crore in the first quarter compared with Rs 31.68 crore in the preceeding one. Operatingprofit was Rs 51.77 crore in the current quarter against Rs 58.78 crore. Depreciation was lower at Rs 19.66 crore compared with Rs 20.15 crore in the previous quarter.

The decline in turnover was partly a result of the 10.6 per cent decline in production of viscose staple fibre (VSF) to 3,168 tonnes, down from 3,544 tonnes. According to a communique issued by the company, production had to be scaled down due to the availability of cheap polyester filament yarn (PFY), leading to a decline in viscose filament yarn (VFY) as well.

Production of carbon black however increased by 7 per cent over the previous quarter. The Chennai plant commissioned last year is now fully operational and turnover in carbon black increased to Rs 56 crore, up from the Rs 52 crore attained in the earlier quarter.

The insulator division saw a decline in turnover to Rs 34 crore. This is compared to Rs 54 crore in the preceeding quarter. According to the company, traditionally the first quarter is slack due to budget allocations andweather conditions. Exports were worth Rs 15 crore. Given the growth potential in the power generation and distribution sector, the company feels that the insulator division is poised for growth.

Th textile division saw a decline in turnover to Rs 81 crore, compared with Rs 85 crore in the preceeding quarter. The division exported textiles worth Rs 42 crore, comprising 52 per cent of its turnover.

In an effort to boost its revenues, the division is focusing on marketing value-added linen fabric and flame-retardant fabric. New markets in the US and Canada are being tapped for marketing fire hoses.

Indian Rayon will be seeking approval from the shareholders to sell off its sea water magnesia plant. According to the release, substantial dumping of fused magnesia from China and the slump in the domestic steel industry has impacted the marketing of these products, resulting in a huge inventory build-up. The book value of investment in this division is Rs 332 crore and net current assets are Rs 21 crore.

INSIGHT:

Carbon black, insulator wings faring well

The Insulator division has managed to maintain volumes at the same level as in the last quarter and is booked for six months. To attract buyers for the sea water magnesia division, its debt has been pre-paid and though steps have been taken to cut down overheads, the negative impact of the fixed costs have continued. The decision to hive off the sea water magnesia division has improved investor perception.

Though the textile division contributes almost 30 per cent of the topline, according to the management, VFY, Carbon black and insulators are the core focus areas. The implication seems to be that textiles is not a focus area.

The insulator division's performance is anticipated because SEBs orders are bunched towards the end of the year. VFY faces problems becuase of polyester--a cheaper substitute. But the carbon black division may perform better, because of the recovery in the automobile sector.

-- Urmik Chhaya