MUMBAI, OCT 1: After losing their cement unit to Grasim Industries, shareholders of Indian Rayon are in for a yet another shock. The board of Aditya Birla group company, Indian Rayon, has decided to provide for a one-time non-cash loss of Rs 300 crore in the second half of the current financial year in order to dispose of the assets of the sea water magnesia division.The company, which was a blue chip company till last year, has formed a committee to expedite the sale of the division and negotiated with around 60 companies, both domestic and foreign, for the purpose. The division, following steep losses due to a recession in the user industries and threat from cheaper imports of fused magnesia from China, has been closed since December 1998.The sale will leave Indian Rayon now with three core businesses: carbon black in which it is the second largest in India, insulators and viscose filament yarn (VFY). Only the carbon black business of Indian Rayon has registered an improvement in performance in thefirst five months of the current fiscal.Indian Rayon has completed major investments in carbon black which is expected to meet its short- and medium-term requirements. The capacity utilisation of the insulators division is still below 100 per cent. The viscose filament yarn business is passing through a depressed phase and the company would look at acquisition opportunities in the long run.Its main business, cement, which contributed around 50 per cent to its turnover, was last year demerged into group flagship Grasim as part of a group restructuring. ``The company lost its charm after the separation of cement unit to Grasim,'' said a shareholder.As it had surplus cash, Indian Rayon has recently decided to buy back 25 per cent of its outstanding equity. Post-buy-back, the Birlas' stake in Indian Rayon will go up to 28.7 per cent from the present 21.5 per cent.
