IFB to focus on core business

Our Corporate Bureau

Kolkata, Aug 14: IFB Industries Ltd, the automotive parts and white goods maker, has decided to concentrate on its core business of engineering, now that it has got rid off all unrelated businesses into which it had diversified over the last two decades, according to chairman Bijon Nag.

In 1998, IFB became a case fit for the Board for Industrial & Financial Reconstruction (BIFR) after having wiped out half its net worth. In July this year, it was referred to the BIFR after having accumulated a loss of Rs 267 crore for the year to March 31, 2001, exceeding its net worth.

Replying to shareholders at their 25th annual general meeting here Tuesday, Mr Nag admitted that the management had lost focus of its core competencies, resulting in the current crisis in the company. “We have decided to re-focus on core areas of competence and I expect to bring the company back on the profitability track in the near future,” Mr Nag said.

The company began as a maker of automotive fine blanked components, and branched out into sub-assemblies like window regulators. Beginning in the early nineties, it made a successful foray into white goods — washing machines, microwave ovens, clothes driers and dishwashers — in a tieup with Germany’s Bosch that was later terminated. IFB even makes and exports motors, especially for washing machines.

The unrelated diversifications — IFB Finance, IFB Securities and IFB Venture Capital — proved disastrous, and have been disposed off.
Mr Nag said the Reserve Bank of India has finally cleared the company’s proposal to sell some of its other subsidiaries. “All overseas subsidiaries will be divested in due course,” Mr Nag said.

IFB’s spokesperson said the company has decided to stick to all areas that require “engineering skills”, meaning the automotive parts group and white goods.

The shareholders cleared a proposal to change the statutory auditors, and Deloitte Haskins & Sells have come in place of Bhadra & Bhadra. Mr Nag said the change was effected at the request of the banks, who “desired to have a name of international repute as the auditors.”

He said IFB has stopped borrowing for the last three years. However, one shareholder sought to interpret this comment as an indication of the aversion of lenders to IFB. “We have also completed the repayment of fixed deposits,” Mr Nag said. The current priority is cost control. “The number of employees has been brought down by 100, and we will continue to do so,” he said.

Mr Nag said all doubtful debts have been written off. During the year to March 31, 2001, IFB recorded a total income of Rs 188.02 crore, against Rs 246.65 crore in the previous fiscal.