ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Multiple Misfortunes

Multiple Misfortunes Hansavivek AUTOMOBILE PRODUCTS OF INDIA'S results for the Near ended July last are disappointing, with drop in gross profit from Rs 139 lakhs to a mere Rs 16 lakhs despite slightly higher sales. After providing for depreciation, there is a loss of Rs 49 lakhs which has further increased to Rs 83 lakhs after adjustments in respect of prior years and provision for contingencies. Together with the loss brought forward from the previous year, the total deficit has mounted up to Rs 109 lakhs. Dividends on both preference and equity capital have been once again skipped. The arrears on the former account aggregate Rs 12 lakhs. The directors say that several factors affected the recoveries resulting in erosion of profit- margins. Continuous rise in costs of inputs has been shifting the break-even point upwards year by year, The price increases obtained in 1974 on the 2- wheelers and 3-wheclers helped the scooter division to sustain itself only for a short period. The company has again approached government for further increases in prices and is awaiting its orders. Turnover in the clutch and brake division, which was a profitable line and which to a great extent helped to neutralise the adverse balance in the scooter division in the past, recorded considerable reduction due to fall in sales owing to difficulties faced by the automobile industry. API has been facing an acute shortage of working funds. There were also restrictions in the supply of power in Maharashtra affecting production in both the Bhandup and Aurangabad divisions. The steep rise in interest rates, moreover, eroded profitability. Operations in the Luck- now division could not be improved due to power shortage and financial constraints. The response to the rights issue of 2,13,249 equity shares, made in mid- 1974, was poor

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