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 With the break up of USSR the company's exports suffered a serious setback, and forex * FERA has been repealed and FEMA has come into existence with effect from 1.6.2000.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
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