Moneycontrol Bureau
Shree Ganesh Jewellery has posted a net loss of Rs 1,048 crore in the quarter ended September 2013 as against profit of Rs 83 crore in a year ago period, impacted by higher expenses that more than doubled.
Ban on import of gold by the government and unwind of one sale transaction affected the profitability of the company.
However, income from operations increased 82 percent year-on-year to Rs 4,142.3 crore during July-September quarter.
Total expenses of the jewellery maker jumped 2.4 times to Rs 5,150.22 crore in second quarter from Rs 2,150.63 crore in a year ago period, led by higher purchases of stock-in-trade and other expenses.
Other expenses according to its press release are:
1) Shree Ganesh Jewellery House FZE, one of the wholly owned subsidiary company in UAE had entered into bullion purchase agreement and due to regulatory non allowance for import of gold into India for domestic selling, the company had to cancel the contract in the month of October 2013. As such the subsidiary had suffered a loss of approximately Rs 1,137 crore of which Rs 61.75 crore is to be provided in standalone books as a diminution in value of investment and Rs 623.72 crore has been provided against bad debt since the subsidiary is also one of the debtor of the company.
2) In FY12-13, the company entered into certain merchanting trade transaction, due to non-saleability of the product, the company had to unwind the sales transaction and call the goods back of Rs 990.50 crore approximately in November. The supplier had accepted the same at Rs 594.30 crore approximately and as such the company had incurred a loss of Rs 396.20 crore approximately, which has been also provided.
3) As an effect of the above, the company's net worth stand reduced by Rs 941.08 crore.
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