Mysore Sales International (MSIL), the Rs 250-crore state-owned marketing enterprise, has severed its last link with the raj era by downing its London trade office shutters.
K M Shivakumar, managing director, MSIL, confirming the closure said the decision was a commercial one. It just did not make sense to keep an office running when it was incurring losses every year. We want to function like a commercial group and opt out of unprofitable ventures, Shivakumar said.
Paradoxically, this comes at a time when other states were counting on consultants abroad to woo foreign direct investment (FDI).
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The London office was set up by the then princely state of Mysore to market its indigenously manufactured products. In 1974, the trade office was handed over by the government of Karnataka to their public sector trading house the MSIL.
Mysore Sales International used the office as a base to further its trade in sandalwood oil products to the Middle East, Europe and the US. However, the office, which was generating business around Rs 1.5-2 crore was running up an annual loss of Rs 40 lakh. It had a staff strength of two.
The parliamentary committee of public undertakings too, had strongly advised MSIL to terminate its London branch because it no longer made business sense. When sandalwood oil fell under the list of restricted export items the recommendation made more sense. This also affected our profitability and made us even more sure about closing down the London office, Shivakumar said.
MSIL recorded a net profit of Rs 7 crore on a turnover of Rs 235 crore in fiscal 1996-97. This was against a turnover of Rs 221 crore in the previous year and a profit of Rs 6 crore. Profit before tax has been put at Rs 12 crore in 1996-97 against Rs 10.93 crore in the previous year.
Another reason for MSIL closing office has been the changing nature of its business. When it lost its monopoly distributorship of wholesale liquor and profitable clients like Mysore Sandal Soap and Birla 3M, MSIL realised they had to shift the focus of their companys profile.
Today companies prefer having their own distribution network. We had to adjust to the changing realities, Shivakumar said. MSIL has gradually moved away from its traditional role as a trading organisation and hopes to concentrate more on its financial services and notebook distribution business. It was hoping to get into the leasing and hire purchase services in a major way and hike its 20 per cent market share in the notebook distribution business. The company, which manages the Bangalore air cargo complex, is also setting up a cold storage unit alongwith Apeda to facilitate exports of perishable items.