Diversification Pays

Diversification Pays Hansavivek INDIAN RAYON's performance during 1978-79 has been so impressive that the directors have not only stepped up dividend from 12.5 per cent to 15 per cent but also proposed a gift of shares on a one-for-four basis. The management is continuing efforts to further diversify the company's activities to maintain growth in the coming years. As government had not approved the company's application for an industrial licence for manufacture of cement for the area applied for, a fresh application has been made for a different area. An application has also made for increasing the licensed city of rayon plant to 7,300 tonnes per annum and another for a licence for an insulator plant for production of 6,000 tonnes in Gujarat. The company is also seeking approval of the government for participation in a joint venture in Philippines for annual production of 3,000 tonnes of insulators. Meanwhile, steps are being taken to modernise and renovate the plant and machinery of all divisions and to diversify the product-mix thereof, to further improve profitability. On sales up from Rs 34,98 crores to Rs 42.72 crores, the company earned a gross profit of Rs 7.67 crores against Rs 5.73 crores in the previous year. These figures reflect widened margins. Net profit was substantially higher at Rs 3.48 crores (Rs 2,12 crores). The enhanced dividend was covered 5.5 times as against 3.14 times previously. The directors have recorded their intention to pay not less than 12 per cent on the expanded capital after the proposed bonus issue. These results followed satisfactory working of all the divisions. To ensure uninterrupted power availability, one more diesel generating set is being installed in the rayon division. A coal fired boiler has also been installed to reduce cost of steam and to increase production of sodium sulphate. The flax division has developed industrial fabrics, some of which were hitherto being imported, A diesel generator set of 860 KVA is being installed to tide over the adverse effects of power shortage. Further modernisation and renovation of the cotton spinning division is in progress. The new synthetic spinning division achieved its full capacity during 1978- 79. The insulator division recorded the highest production so far achieved in any year. The letter of intent' for substantial expansion has been converted into an industrial licence. The division has planned to go in for production of sophisticated high voltage insulators meant for 400 KVA transmission lines. The expansion and modernisation are expected to be completed by the end of 1980.