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Samir Thapar has finally managed to restructure JCT. Part of the business has been sold, and the rest has been transformed. Now, he has to ensure the company succeeds in its core business---nylon, yarn, and textiles. By Ranju Sarkar
Thapar expects to earn an operating profits (PBDIT) of Rs 50 crore and a cash profit of Rs 25 crore in the financial year 2001-02, which will help it not only pay the interest, but also repay the principal. But just how well-placed is JCT in the residual businesses? The textiles, nylon, and steel divisions have sales turnovers of Rs 310 crore, Rs 180 crore, and Rs 100 crore, respectively. The textiles division makes shirtings and cotton bottom weight fabric, which are sold to local garment manufacturers, and exports nearly Rs 70 crore of fabrics to the US and European markets. The steel division---for which the Thapars have been trying to find a buyer---makes special wires for industrial use like ball bearing, wire ropes, and cycle spokes. As per the company's unaudited accounts on September 30, 2000 (JCT has since extended the fiscal year to 18 months ended March 2000) the textiles division had operating profits of Rs 40 crore, the nylon division around Rs 6 crore, and the steel division around Rs 2 crore. Considering liabilities of Rs 44 crore (interest repayment and lease rentals of Rs 30 crore, and loan repayment of Rs 14 crore) JCT would be able to earn a net profit of Rs 2-3 crore next fiscal. But much would depend on the performance of
the textiles business. Although JCT has been focusing on value-added
fabrics, it faces tough competition at home, as well as on the export
front. Although exports have grown, margins have been under pressure. As
the slowdown in the US economy has indirectly affected exports to
countries like Bangladesh, the net margins have shrunk between 5-7 per
cent. Thus, even as the Thapars may want to celebrate a successful
restructuring exercise, JCT's fortunes will depend on how it handles its
textiles business. |
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Samir
Thapar is a happy man these days. He has pulled off a comprehensive
corporate restructuring exercise of the M.M. Thapar Group flagship, JCT,
which will see the loss-making company reduce its debt burden from Rs 900
crore to Rs 164 crore, and cut interest liability from Rs 170 crore to 25
crore. Says the 39-year-old Thapar: ''This will allow us to focus on our
core business----textiles and nylon yarn.'' JCT also plans to sell its
steel division located in Hoshiarpur.