Bombay Rayon Q2 results suffer due to European slowdown

Affected by the slowdown in Europe and rising

input costs, the Mumbai-based vertically integrated textile company Bombay Rayon Fashions reported a net loss of Rs 104.85 crores in the second quarter ending September 30, 2013, against the net profit of Rs 43.58 crores in the corresponding quarter of previous fiscal. The loss, however, narrowed significantly from Rs 411.75 crores reported in the preceding quarter ended June 30, 2013.

Net sales of the company fell 4 percent to Rs 685.75 crores from Rs 714.34 crores in the same quarter last year. 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 in 2010 has left the company with a debt burden of over Rs 4,100 crores.

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.

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.”