Brush with soap prods bet on cloth too

Written by M Sarita Varma | Updated: Dec 6 2010, 14:45pm hrs
A quick rub with the soap business was no bubble bath for Kerala PSU bosses, stuck in the heat and dust of an ambitious PSU re-engineering odyssey. But the scent of success from Kerala Soaps Ltd has proved heady enough to buoy the state to pump Rs 450 crore into setting up more public sector units, including a hi-tech weaving mill, this year.

The sandal(wood) soap-manufacturing unit (that was closed down due to financial trouble) is doing the Phoenix act within nine months of operation, says K Padma Kumar, secretary, Public Sector Restructuring & Internal Audit Board (RIAB). Against about Rs 70 lakh monthly sales, the Kozhikode-based company has been posting a wafer-thin, but decisive, profit of Rs 1 lakh every month. This, at just 50% plant capacity use.

The closed-down unit, set up in 1914, was a sprawling one, its staff exited on VRS. At Rs 7.5-crore extra investment, the new soap factory is smaller in size and manpower, but runs on state-of-the-art machinery.

Since soap brands are dime a dozen, the key challenge was in marketing, not manufacturing, says MD Josemon, managing director, Kerala State Industrial Enterprises, that runs Kerala Soaps Ltd. He admits that the much-watched revival is sped up through the purchase-preference support of two sibling state-run outfits, the 1,400-outlet retail network of Supplyco and Keralas largest hotel chain, KTDC.

At the same time, the pricing of flagship Kerala Sandal soap had to be competitive. The premium soap brand Thrill sells at half the price of its direct competitor. Before its first birthday in the new avatar, the soap firm is shaking off its PSU jitters, to take the plunge into the crowded all-India market, with a modest ad campaign. Banking on the diaspora support, we are also firming a couple of orders from the UAE and Saudi Arabia, says Josemon.

As Kerala Soaps moves to launching a detergent brand Washwell, the states PSU board is readying to invest in cloth business.

The State Textile Corporation (KSTC) has been told to expedite the Hi-tech Weaving Mill at Kannur in North Kerala. This Rs 20.3-crore mill will be one of the 10 more public sector units that are coming up in the state, on a total investment of Rs 450-crore, says T Balakrishan, additional chief secretary, Kerala. He feels the textile sector would emerge a future growth-driver, with the domestic demand pacing up faster than supply.

A state that nurses the countrys biggest fleet of PSUs has been on a focused drill of recasting its PSU management to improve the balance sheets. For 09-10, the top five PSUs in terms of operating profits have been Kerala Minerals & Metals (Rs 90 crore), Malabar Cements (Rs 31 crore), Kerala State Industrial Development Corporation (Rs 25 crore), Transformers & Electricals Kerala (Rs 23 crore) and Travancore Titanium Products (Rs 21 crore). The states moment of glory is that 37 PSUs that posted an aggregate operating loss of Rs 69.64 crore in 2005-6 have clocked Rs 239.75 crore operating profit in 2009-10.

Much of this was accomplished by monitoring the PSU performance regularly and supplying the critical capital or management inputs at the right time, says state industry minister Elamaram Kareem.

This month, as Kerala is readying to showcase its public sector experiments internationally through a global PSU meet involving UN experts, there is one more initiative that needs to be put in place. The audit-upkeep in state PSUs should be made as rigorous as that on a public limited company, says Mridul Eapen, public sector researcher and member, State Planning Board.

Despite its dazzling turnaround feats, the state remains a laggard in timely audit of its enterprises. Some units have audit backlog, running to ten years.