Internal Accruals Help Nirma Slash Borrowings

Mumbai, September 25: | Updated: Sep 26 2002, 05:30am hrs
Nirma Ltd has reduced its borrowings from Rs 1,102 crore to Rs 779 crore, utilising the internal accruals during the financial year 2001-02.

The company, according to its annual report for 2001-02, proposes to further reduce the borrowings in the forthcoming years.

The debt-equity ratio of the company has thus improved from 0.84:1 to 0.62:1 in the current year. As a result of this, the company expects a reduction in interest expenses for the current financial year 2002-03.

Going forward, the company plans to continue using the accruals to repay its debt, it said in its annual report.

In order to augment its working capital and to bring in cost efficiency in funding cost during the year under review, Nirma issued secured non-convertible debentures in various series aggregating Rs 360 crore, by way of private placement.

The company has also redeemed, in time, secured non-convertible debentures aggregating Rs 589.65 crore.

Nirma reported a lower turnover of Rs 2,276 crore in 2001-02, as compared to Rs 2,428 crore in the previous fiscal, a decline of six per cent.

The company said that the detergent segment was under huge pressure during 2001-02. As per the company estimates, the market size of this segment has shrunk by nine per cent in volume terms over the previous year.

According to the company, there was a consequential effect during the year on its detergent sales as well. Realisations of detergent fell marginally by one per cent. During the year, the per unit cost of production of detergents declined 6 per cent on account of higher percentage of captive consumption of raw materials thus reflecting the advantages of backward integration. The company is a market leader in detergents.

In line with most fast-moving consumer goods (FMCG) segments, toilet soaps segment recorded a de-growth of 12 per cent in value terms.

The domestic companies faced a battle on various fronts, from sluggish demand, price discounts and freebies by players to imports in the urban markets.

There was a two per cent decline in realisations of toilet soaps.