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Bombay Rayon Fashions: In the grip of a European slowdown
27
Nov '13
Hit by slowdown in Europe and rising input costs, the Mumbai-based vertically integrated textile company Bombay Rayon Fashions Ltd (BRFL) continues to post losses while slowly going up the learning curve.

For the quarter ended September 30, 2013, the company posted a net loss of Rs 104.85 crore as against the net profit of Rs 43.58 crore in the corresponding quarter of previous fiscal. The loss, however, narrowed significantly from Rs 411.75 crore reported in the preceding quarter ended June 30, 2013.

Net sales of the company fell 4 per cent to Rs 685.75 crore in Q2 FY’14 from Rs 714.34 crore in Q2 FY’13. Piling debt burden following acquisitions in last few years also continues to weigh upon BRFL’s bottom-line. Acquisition of UK-based DPJ Clothing in 2007 and STI India Ltd in 2010 has left the company with a debt burden of over Rs 4,100 crore.

Stubborn losses at the company’s wholly owned subsidiary BRFL Italia Srl, Italy, have also hit the bottom-line of the company. Due to economic slowdown in Europe and rising costs, BRFL Italia has been shutting down its loss making stores and is in the process of rationalizing the business.

BRFL Italia had posted a loss of Rs 50.82 crore in the fiscal year 2012-13. Other subsidiaries of the company like DPJ Clothing and BRFL Europe B.V.—both based out of Euro area—reported losses of Rs 2.33 crore and Rs 5.63 lakh respectively in FY’13.

In its investors’ presentation released at the end of March 2013, the company had said, “Due to time required in building efficiency amongst the workers, it was not possible to improve the garment manufacturing capacity utilization immediately.”

The company had also said that it is slowly going up the learning curve and will increase the capacity utilization substantially over the next three years. 

Fibre2fashion News Desk - India

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