The K K Bangur-controlled engineering major, GKW Ltd, has chalked out a three-pronged strategy for its various businesses by revamping the existing businesses, rationalisation of workforce and restructuring of debt components to counter growing competition.
The company proposes to enter into strategic alliances with overseas or Indian firms, T K Faris, chairman, GKW said at the company's 68th annual general meeting held here yesterday.
"We are looking at various options to improve the company's bottomline over the next 12 months. The options include hiving off existing businesses into separate companies in technical or financial collaboration with prospective partners," K K Bangur, vice-chairman said.
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Fresh infusion of funds from prospective collaborators is another option being explored by the company, he added.
However, there will be no change in the existing shareholding pattern, and the Bangurs shall continue to hold a 12 per cent stake in the company.
Low demand and severe price competition in the steel, automotive and electrical sectors have affected the company's performance in the last financial year 1997-98. The company registered a net loss of Rs 25.36 crore in 1997-98 against a net profit of Rs 5.06 crore in the previous fiscal.
The first part of the strategy involves restructuring by rationalising manpower and revamping existing businesses with tie-ups, joint ventures, and strategic alliances.
However, Bangur refused to divulge the identity of the prospective partners with whom negotiations are currently on. "Our objective is to reduce our debt burden by about 80 per cent in an innovative manner soon," Bangur said.
As on March 31, 1998, total borrowings stood at Rs 206.56 crore, out of which bank borrowings was Rs 50.93 crore. Outstanding bills discounted was Rs 14 lakh during the year.
In the second leg of the strategy, it is planning to reduce costs and hopes to achieve a quantum jump in productivity. Currently, the company's Sankey Electrical Stampings division at Mumbai and the steel division unit in Calcutta is under lockout due to labour problems. The last stage shall place greater emphasis on core competencies. Meanwhile, GKW's Rs 400 crore cement project has been put on hold due to a financial crunch. Efforts are on to identify a suitable partner who can infuse fresh funds into the project.
There has been little progress on its property development front due to stagnant conditions prevalent in the Mumbai real estate market.
During the year, the company allotted zero coupon, non interest bearing, unsecured optionally convertible debentures of Rs 19.50 each aggregating Rs 27.50 crore to the promoter group.
However, Faris is upbeat about the company's future inspite of a long phase of recessionary trend. "The recent policy pronouncements by the government and the overwhelming response to the Resurgent India Bonds has kidled a ray of hope for improvement in investments and demand situation in the economy," he added.