Mounting losses sustained by Indian Rayon in its sea water magnesia business pulled down operating profit to Rs 394 crore from Rs 428 crore in the previous fiscal. Even gross profit slipped from Rs 319 crore to Rs 252 crore during the period.

During 1998-99, Indian Rayon & Industries recorded a modest 3 per cent rise in turnover from Rs 1,815 crore to Rs 1,872 crore. "Net profit suffered mainly due to losses sustained by the company in its sea water magnesia business. Had Indian Rayon not been so constrained, it would have matched the previous year's performance," a company release said.

At the National Stock Exchange, the Indian Rayon scrip gained 3.66 per cent to close at Rs 72.05. Over 76,000 shares of the company were traded at thebourse.

Operations at the bleeding sea water magnesia plant at Vishakhapatnam has been temporarily suspended due to adverse market conditions. "The company is actively examining a range of restructuring options aimed at curtailing losses and enhancement of shareholder value," the company said.

Even as production of VFY improved during the previous fiscal, sales realisation and operating margin took a beating due to sluggish conditions in the textile industry. "The performance of the caustic soda plant and 16.5 mw captive power unit also impacted the division's results adversely," the company has said.

The carbon black division, however, recorded a 52 per cent volume growth during the fiscal following commissioning of its new 35,000 tonne facility at Gummidipoondi. The textile division suffered due to lower margins in polyester viscose blended yarn, the company said.

During the year, Indian Rayon's cement division produced 2.58 million tonnes of cement, as against 3.08 million tonnes the previous year.The division, as earlier announced, would be hived off to group flagship Grasim Industries. Although the high courts of Gujarat and Madhya Pradesh have already cleared the demerger on an ongoing basis, the scheme is yet to be ratified by other statutory regulators.