Birla Corporation Ltd, flagship company of the Madhav Prasad Birla group, is examining restructuring of operations. The focal point of the restructuring is to rationalise divisions which are making insignificant contributions to total turnover.
Divisions with insignificant contribution to total turnover are : synthetics and cotton yarn (0.12 per cent), vinoleum (0.81 per cent) and carbide and gases (3.27 per cent). The company reported a turnover of Rs 1011.84 crore in the financial year ended March 31, 2000.
Informed sources said the company had appointed advisors to review business operations and financial position of the company and suggest a structure for its operations including restructuring of its various businesses. The smaller divisions employ nearly 1500 workers.
Autotrim division, which contributed only 3.49 per cent, might be one of the core areas of the business due to an expected "higher demand for auto trim products driven by an upturn in the automobile industry," they added.
Core areas of business include cement - the main money spinner with a 80.31 per cent contribution to total revenue - and jute which earns 12 per cent of turnover.
The company does not wish to spell out the rationalisation in public, at least for the time being. A questionnaire mailed to Birla Corporation managing director K C Mittal on May 23 remained unanswered.
When contacted today, Mittal admitted that he received a questionnaire. "I don't want to talk to the press right now for benefit of shareholders. All I can say is that the company is doing well," he said.
Informed sources, however, affirmed that the proposed rationalisation was on. They also claimed that the rationalisation would not harm workers of the concerned divisions." The company will either give them VRS or redeploy them," they added.
Birla Corporation's calcium carbide and gases division started production in 1954 while the synthetics division was introduced in 1957. The company diversified into vinoleum production in 1989.
Installed capacity of calcium carbide and gases, synthetics and vinoleum stand at 15,500 tonnes per annum, 49,656 ring spindles and 48.60 lakh square meters of PVC floor covering and coated fabrics respectively.
Experts said the rationalisation, if implemented, would prop up the company's bottomline since these divisions have become drag on its profitability.
The company had admitted in its letter of offer for its recent rights issue that these divisions were not doing well owing to various problems like cheap imports from China and Romania (in case of calcium carbide), low productivity (in synthetic business) and excess capacity (in the vinoleum market).
