Indian Rayon net rises 19 per cent to Rs 69 cr

Our Corporate Bureau

Mumbai, April 26 : INDIAN Rayon and Industries Ltd, the flagship company of the Aditya Birla Group, has recorded a 19 per cent increase in net profit for the year ended March 31, 2001 at Rs 69 crore, as compared to Rs 58 crore the previous year.

The turnover of the company for the year increased by 32 per cent at Rs 1,416 crore, as against Rs 1,072 crore the previous year. Earning per share (EPS) increased by 19 per cent at Rs 11.4 against Rs 9.6 the previous year.

The board has recommended a dividend of 30 per cent for the year. This will absorb Rs 17.96 crore. Exports also saw an increase at Rs 397 crore against Rs 296 the previous year.

Indian Rayon President and Chief Financial Officer Adesh Gupta said that the board has decided to buyback shares for 15 per cent of outstanding equity at a maximum price of Rs 95 per share. The total outgo for the buyback will be Rs 85 crore. This will increase Indian Rayon’s stake by 3 per cent from the present 26.6 per cent.

He added, “the present market environment offers limited growth opportunities. The buyback gives the company the most tax-efficient way to return surplus cash to the shareholders.

This would provide an exit route from the stock to them, without substantially impacting either the price at which they exit, or adversely affecting the interest of ongoing shareholders.”

Mr Gupta said that the future outlook for garments is impressive, with the industry pegged to grow at 15 per cent in the medium term and the trousers emerging as a fast growth segment, slated to grow at 40 per cent.
He added the encouraging demand for insulators, continued growth in exports and movement towards higher value products will further enhance the bottomline.

The performance of carbon black will depend on how soon the heavy vehicles and automobile sector show an upward trend, he said adding that oil prices will also determine which way the sector moves.

Mr Gupta added that the company intends to increase its turnover through higher utilisation of existing capacities, coupled with better control over cost and manufacturing efficiencies.

This will add to the company’s future profitability and free cash flows. The buyback of shares will also enhance the company’s future EPS and shareholder returns.