Tomco had also launched a shampoo raindrop and a

Procter and Gamble's Ariel and HLL's Surf Ultra. TOMCO had also
launched a shampoo Raindrop, and a tooth paste - Effermint.
TOMCO's financial performance over the period March 1986 to
March 1990 had been impressive, with an increase in turnover from Rs.
237 crores to Rs. 335 crores, an increase of 41%. The spectacular

performance in 1990 could be attributed to a growth in rural markets as
well as a Rs. 28 crores export order for detergents to USSR. A tighter
control on input costs had also contributed towards better financial
performance. However, after 1990, the profit margins were eroded due
to increase in prices of soap making oils and fats. In fact in 1991
alone, the prices of oil rose by Rs. 3500 per tonne, accounting for 63
per cent of the raw material cost. With the break up of USSR the
company's exports suffered a serious setback, and forex
* FERA has been repealed and FEMA has come into existence with effect from 1.6.2000.
Earnings dropped from Rs. 29 crores in 1989-90 to Rs. 8 crores in
1990-91. Although the company achieved a turnover of Rs. 387.22
crores for 1990-91, a rise of 14% over the previous year, its pretax
profit dipped by 11% to Rs. 6.55 crores. The high cost of raw
materials and an increasing wage bill, coupled with stiff
competition further eroded profit margins, in 1992. Currently the
company was losing heavily and facing a severe cash crunch resulting in
further deterioration of profits. Table 2 gives financial information and
shareholding pattern for TOMCO.
TATA OIL MILLS
COMPANY LIMITED
Profit and Loss Account
Rs. in crore
For the year ended
31 D b Income
Sales
Other Income
Expenditure
Material Cost
Staff Expenses
Other Expenses
Depreciation

Interest
Profit Before Tax
Taxation
Profit After Tax
Dividend Rate %
Earnings per Share
Return on Capital
Market Price —
High
Low
Average
Shareholding Pattern
as on 26 8 93 Directors
Public
Corporate Bodies
Financial
Foreign Holding
100.00
Growth Plans
In July 1987, TOMCO's Chairman, Dr. H.N. Sethna brought in Mr. N.S.
Sundarajan as his Managing Director to reverse the company's fortunes. After a
careful analysis the management team decided to consolidate in the area of soaps
and detergents while diversifying into related and unrelated areas. The increasing
prices of soap making oils prompted the management to reduce its dependence on
soaps. Also, it decided to enhance the production capacity of detergents, as it did not
require the high cost soap - making oils and fats.
In order to achieve its growth plans and consolidate existing brands, the
company embarked on an ambitious modernisation-cum-diversification plan. It put up
additional facilities of toilet soaps and detergents in Sewree, Ghaziabad, Madras and
established new facilities at Ghaziabad in the North and Ernakulam in the South. It
also implemented a Rs. 62 crore project, Tata Vashisti Detergents Ltd., at Chiplun in -

Maharashtra, to manufacture soaps and detergents. In order to extend its market
coverage, it entered into a joint venture agreement with the West Bengal Industrial
Development Corporation and took over Gloria Chemicals. As a part of its backward