Into Windfall Areas

Into Windfall Areas Hansavivek GOLDEN TOBACCO is diversifying into shipping and real estate business. The Company Law Board has confirmed alterations in the object clauses of its memorandum of association with minor amendments. The company's application for starting shipping business is expected to be cleared shortly by government. The Board of Investment, Thailand, has cleared the company's proposal for setting up a paper project in Thailand, through a separate company under incorporation there. Necessary permission is being taken from the Government of India. The company is also expanding its business in the home market Its manufacturing arrangements with Universal Tobacco, Hyderabad, J and K Cigarettes, Jarnmu, and Sikkimi Tobacco, Sikkim, are working satisfactorily. There has been delay in setting up of factories by Suvarna Filter and Tobacco Products and Geekay Tobacco. Arrangements have also been made with Sri Chandra Tobacco, Hyderabad, and North Eastern Tobacco Company. Assam, for manufacture of the company's brands of cigarettes in their factories which are being set up. Production in these factories is expected to start during the current year. In order to meet competition from multinational and other cigarette manufacturers, the company has strengthened its marketing network. It now has regional sales offices at Bombay, New Delhi, Chandigarh, Lucknow, Calcutta, Madras and Bangalore, and a sub-office at Cochin. This, coupled with aggressive marketing, has enabled the company to expand turnover from the previous year's Rs 36.32 crore to Rs 46.31 crore. Production at 18,267 million cigarettes was the highest so far achieved, and signified an increase of 13.59 per cent over the 16,081 million pieces produced last year. This has been possible because of better utilisation of capacities, efficiency in production, and installation of balancing equipment and packing machines. In addition, 637 million cigarettes, as against 204 million last year, were procured after getting the same manufactured under strict supervision for quality, to meet the increasing demand for the company's brands. Profit margins were slightly shaded. Gross profit amounted to Rs 4.13 crore against Rs 330 crore previously. Net profit was Rs 1.94 crore (Rs 1.22 crore). Dividend, stepped up 2 points to 20 per cent, was covered 1.94 times, against 1.35 times previously. Exports declined from Rs 1.95 crore to Rs 1.35 crore. The management is exploring new markets. Downward trend in export of cigarettes has been checked, but exports of tobacco have not yet picked up due to continuing uneconomic prices in international markets and general recession in the developed countries. To meet long- term working capital requirements, the company issued through prospectus debentures of Rs 3 crore carrying interest at 15 per cent per annum and redeemable after seven years at a premium of five per cent. Four subsidiary companies issued further capital and one called up uncalled capital. Bombay high Court has decided in the company's favour its petition for refund of excise duty paid on post-manufacturing expenses, resulting in a refund of over Rs 6 crore. Steps have been taken to get the refund, which will be accounted for after the matter is finally settled. The company made investment of about Rs 23 lakh in subsidiary companies. One of these companies, Golden Investment (Sikkim), declared an interim dividend of Rs 825 per share of Rs 10 each.