In the first quarter of the current year, the operating surplus declined to Rs 12.14 crore from Rs 18.33 crore. According to the vice-president (finance) of the company, PK Chand, this was due to "cash losses during the last two financial years and outstanding long-term debts."

Interest cost in the quarter of 1999 was Rs 13.80 crore against Rs 12.04 crore during the same period last year. The gross loss after interest but before depreciation was Rs 1.66 crore against a gross profit of Rs 6.29 crore in the comparable quarter of 1998.

In 1998-99, the company had suffered a net loss of Rs 53.62 crore on sales of Rs 873.30 crore.

The company has pointed out that in the first quarter of the current year, cement demand increased but supplyoutstripped the growth because of excess capacity in the industry.

"The spurt in demand in western and southern regions was because of infrastructural activities. The supply in Satna cluster, where two of the company's plants are located, far exceeds the demand. The second quarter, being the monsoon season, may not also witness the required growth," the company has noted.

It has added that the company's Satna and Durgapur plants have been exporting large quantities of cement to Bangladesh and Nepal where prices have gone down "substantially on account of cheaper supplies from China and Indonesia and the prevailing prices hardly give any contribution."

The working of the jute division was adversely affected by the twin impact of rising raw jute prices and diminishing finished goods realisation.. Besides, the market for value added products overseas has also deteriorated.

The synthetics division continues to be under work suspension since November 2, 1998. The division has suffered "heavy" losses as theincreased cost of inputs could not be covered by sales realisation. The export market also remains sluggish.