HEG chalks out restructuring plans, to exit textile business

Our Corporate Bureau

New Delhi, May 7: HEG, a Bhilwara Group company, is planning to gradually exit from its textile business due to declining profits and depressed market conditions. It has identified graphite as its core competency.

Says HEG president RC Surana: ‘‘Graphite electrodes will be our main area of focus followed by sponge iron. The company plans to shift the focus to non-textile areas even though we are making cash profits in the textiles business.’’

He was speaking to newspersons on the sidelines of a press conference here on Monday where the company declared its financial results for the year April 2000-March 2001.

Mr Surana said to exit the textile business, the company has two options — either the textile business could be hived off as an independent company or it could be merged into the other group companies. He added that no decision has as yet been taken on a future course of action for the textiles business.

As far as graphite electrode was concerned, Mr Surana said the company has already initiated a Rs 50-crore expansion, which will be completed by July this year. Besides, cost management is also being followed aggressively within HEG.

‘‘We appointed Pricewater-houseCoopers last year to do our business process re-engineering. This has meant considerably lower manufacturing costs, specially for the electrodes business,’’ he said
Mr Surana said: ‘‘Despite the discouraging market conditions, we have actually increased both sales and net profits and even managed to crack the Japanese market in terms of exports.’’

During the financial year April 2000-March 2001, the company registered a 32 per cent increase in its profit at Rs 40.11 crore as compared to Rs 30.30 crore in the previous year.

The company’s turnover increased to touch Rs 552.5 crore, an increase of 17 per cent from Rs 472.2 crore recorded in the previous year.

The company has declared a 38 per cent increase in exports during the year under review.