Stone India manufactures braking systems for railways and supplies components to the defence sector in addition to manufacturing colour monitors. The company proposes to enter the chemicals business also.

The company posted a drop in net sales turnover to Rs 40.08 crore to March 31, 1999, compared to Rs 41.72 crore in the previous year. It recommended a 12 per cent dividend or Rs 1.20 for each share in 1998-99 compared to 17 per cent or Rs 1.70 per share in the previous year.

Managing director VK Kakkar told shareholders at the annual general meeting on Tuesday here that stiff competition, especially in respect of two products, had resulted in price erosion of around 24 per centon sale cost.

The company's colour monitor business was affected due to changes in the duty structure. It manufactured only 334 colour monitors, utilising around one per cent of its annual installed capacity of 30,000.

Kakkar said the colour monitor business was a victim of globalisation. In response to queries by shareholders about non-utilisation of idle capacity, he said it was a decision taken out of caution to curtail production and maintain profitability.

The company's total interest component increased by around 24 per cent to Rs 2.26 crore to March 31, 1999, compared to Rs 1.82 crore in the previous year. Net interest payout increased by nearly 187 per cent to Rs 65.55 lakh in 1998-99 against Rs 22.84 lakh in the previous fiscal.

The management noted that it received Rs 1.61 crore interest on deposits and others which was deducted from the total interest paid out. However, the company's cash flow statement shows Rs 67.97 lakh as interest received.

On the export front, the company's earningsin foreign exchange dipped by around 22 per cent to Rs 24.69 lakh in 1998-99 against Rs 31.62 lakh in the previous year.

Stone India has made a provision of Rs 43.64 lakh for bad loans, which is roughly one per cent of its turnover.

In addition to this, its statutory auditors Lodha & Co have pointed out that there are certain overdues in respect of recovery of interest and commitment fees. According to the notes to the schedules, Rs 57 lakh is due from an associate company now in the ambit of the Board for Industrial & Financial Reconstruction.

The management noted that interest has not been received on Rs 9.51 crore loans including interest advanced to certain individuals and parties. The outstandings have been duly confirmed and repayments have been assured by the parties.