Given the 35 per cent jump in operating profits at Rs 29.67 crore, the company decided to write off the one-time exceptional expenditure of Rs 27.07 crore on account of the voluntary retirement scheme (VRS) in a single year, rather than to amortize the amount.

This, according to a company press release, will enable it to benefit from lower employee costs from the current year itself. The exceptional expenditure includes VRS costs of Rs 22.4 crore and related employee dues of Rs 4.67 crore.

The company implemented its first VRS in 42 years during 1998-99. In the first phase, launched in November 1998, 118 employees accepted the scheme. In the second phase, launched in February 1999, a further 325 employeesfollowed. The company said that the VRS was both successful and cost-effective, resulting in the separation of 443 employees (employee base down by 27 per cent) at an average compensation of Rs 5.1 lakh. The recurring annual savings envisaged is approximately Rs 8 crore. Provision for taxation stood at Rs 30 lakh.

During 1998-99, sales of all the core businesses of the company have shown healthy growth. Sales of the cellulose ethers and ploymensates division grew 27 per cent, leather chemicals grew 16 per cent while pigment and additives grew nine per cent. Local sales of the fine chemicals division registered a jump of 26.5 per cent. Sales from manufacture, on a comparable basis (net of the textile dyes business), rose by 16.5 per cent though net sales for the year fell to Rs 296.32 crores from Rs 336.30 crores in the previous year.

The company's strategy of divesting the textile dyes business and discontinuing merchant exports of related dye intermediates impacted total sales, but added substantialvalue for the company, a press release said.

Colour-Chem, which represents five out of the six businesses of Clariant AG in India, is the market leader in diketene and its derivatives as well as pigments.