The drop is net profit is mainly because of a fall in the extraordinary income to Rs 6.3 crore from Rs 43.76 crore last year. Extraordinary income represents non-compete fees received from Sara Lee DE/NV.

The net has dropped despite the fact that the company has deferred its advertising and publicity expenditure on major products launched during the year over a period of twelve months from the launch of the product. The deferred amount is Rs 5.58 crore.

Income from operations rose 26.4 per cent to Rs 767.91 crore during the period from Rs 607.36 crore. The audited results were taken on record at a board meeting on Monday. Total expenditure increased to Rs 680.31 crore from Rs 536.40 crore.

Operating profit has increased to Rs 87.6 crore for the period from Rs 70.96 crore last year. Operating profit margins have remained almoststagnant at 11 per cent. Net profit margins have taken a beating and fallen to 1.11 per cent from 4.12 per cent last year.

The board has recommended a lower dividend of Rs 1.3 per share on its equity share capital of Rs 59.79 crore, against Rs 2.8 per share announced in the previous year. The company has paid an aggregate dividend of Rs 1.39 crore on its preference share capital.

The share price of Godrej Soaps at Rs 37.8 per share on the Bombay Stock Exchange was up from its previous close of Rs 34.4 per share. Depreciation was higher at Rs 19.71 crore from Rs 18.49 crore. The company has provided depreciation on straight line method on all fixed assets as against on written down value method on certain assets last year. The company said, `As a result profit for the year is higher by Rs 1.35 crore.'

Provision for taxation was lower at Rs 1.1 crore, against Rs 2.86 crore last year. Interest and financial charges have dropped to Rs 65.94 crore from Rs 72.86 crore in the previous year.

Insight --poor run continues

Continuing in last year's poor vein, the results of Godrej Soaps for the year ended March 1998 have been no better. The poor quality of earnings can simply be judged by the fact, that had it not been for extraordinary income from Sara Lee's non-competition fees, deferment of ad-expenditure and a change in the accounting treatment for depreciation, the company would have posted a net loss.

Interestingly enough despite the poor performance Godrej Soaps has declared a dividend of 13 per cent which erode away 91.12 per cent of the company's net profit of Rs 8.53 crore. Apart from the equity dividend, Godrej will also be paying Rs 1.39 crore as dividend on preference share, which simply means that the company would have to dig into its reserves to pay out this dividend.