The Net Worth Dropped Almost 55% to INR 185.18 Crore in 2011-12

Business Standard reported that the Hinduja Group’s foundry arm Hinduja Foundries Ltd is planning to report to the Board for Industrial and Financial Reconstruction due to the erosion of net worth of the company.

According to company’s annual report, the net worth dropped almost 55% to INR 185.18 crore in 2011-12.

While several attempts, through phone and SMS, were made to reach company’s MD Mr B Swaminathan, he was not reachable. The company’s announcement to the BSE said that a meeting of the Board of Directors will be held on December 28th 2012, to consider reporting to the BIFR on the erosion of 50% or more of the peak net worth of the company during the immediately preceding four financial years by its accumulated losses as at September 30th 2012, pursuant to Section 23 of the Sick Industrial Companies Act, 1985 and to comply the matters connected therewith.

According to company’s recent annual report, in 2011-12 company’s net worth was INR 185.18 crore as compared to INR 408.52 crore, a year ago.

Rating agency ICRA in its report published in August, 2012, said that due to several factors, including a sluggish demand for its castings, wage arrears settlement and provision for doubtful receivables, the company has been making losses in the last few quarters. In 2011-12 the company has reported a loss of INR 291.34 crore as compared to profit of INR 7.48 crore in 2010-11.

The report said that company’s debt level has also increased with the a ailment of additional short term borrowings to fund the loss. Interest costs for the 15 month period was INR 90.53 crore, compared with INR 34 crore in the previous 12-month period.

According to company’s 5 year review, borrowed funds stood at INR 673.36 crore as compared to INR 570.57 crore, a year ago.

It said that the company is planning to raise INR 300 crore from its promoters including Ashok Leyland.

It added that “The scenario of continuous incurrence of losses, the company had constraints in obtaining long term fund from the marketô institutions to meet the expenditure including cash losses, which had to be met through working capital and short term loans.”