HYDERABAD, May 16: As anticipated by analysts VST Industries Ltd (VST) has announced discouraging results for the financial year ending March 1997 owing to its diversification into financial services and agro-product businesses.

The company has recorded a net profit of Rs 7.56 crore which is 66.5 per cent lower than its previous year's earning. Net sales fell by 6.94 per cent over the previous year reporting Rs 567.78 crore.

The company ended up paying heavily on luxury tax amounting to Rs 25 crore (all the subsidiaries together) which led to a fall in PAT, said sources.

According to VST finance manager the major market for the company is West Bengal where it markets about 60 % of its production while paying higher luxury tax at 10 %t. The second reason attributed for low profits is because of the poor performance in the `financial services' business due to the adverse market conditions.

However, now the company has stopped the business and the division got merged with ITC Agro-tech Financial Services Ltd. In return VST is expected to receive the investment blocked in share business which is about Rs 50 crore, sources said.

The third reason is due to the delay in implementation of the agri-product project, VST Natural Product Ltd, a subsidiary of the company. According to sources the project got delayed by a period of about one year.

The cost overrun on the project, however, could not be ascertained. In all VST had spent about Rs 40 crore on the project which started commercial production during September 1996, sources added.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.