Nusli Wadia Group Is On The Move

Mumbai, Sept 12: | Updated: Sep 13 2003, 05:30am hrs
The Rs 3,000-crore Nusli Wadia group with 16 companies under its fold is moving with the times. The Wadias hold 47 per cent equity in Britannia Industries, 70 per cent in Bombay Burmah, 65 per cent in National Peroxide, 42.4 per cent in Bombay Dyeing and 49 per cent in Citurgia Biochemicals. The new corporate strategy is to stay lean on cost and strong on bottomlines, to tackle internecine competition in its products - textiles, petrochemicals, foods, real estate, plantations and light engineering. Strangely, in all these product groups, - barring petrochemicals - the unorganised segment has a dominant presence. Core competence, therefore, is the new mantra.

Wadias cautious entry into sunshine sectors like IT, clinical research and entertainment is understandable. The groups decision to have a fling at the entertainment sector looks dicey, as the current state of the entertainment sector, particularly electronic media/software is far from promising. Hardly a handful of companies have done well. Most have been doddering, judged by any financial indicator. Clinical research is an area with growth potential particularly after 2005. Most pharma MNCs will farm out clinical research work to Indian drug companies.

Britannias annual report for 2001-02 says: We plan to improve our sales through new product launches, renovation and improving distribution. We will also focus on all-round cost savings and improvement in productivity to ensure satisfactory growth in profits. This symbolises the mission statement of the Group.

During the year to March 2003, the groups aggregate turnover was 1.7 per cent lower to Rs 2,551 crore and net profit by 28.9 per cent at Rs 118.9 crore. In the quarter to June 2003, four of the five listed companies have reported net profit. The five listed companies are: Britannia Industries (BIL) Bombay Burmah Trading Corporation (BBTC), Bombay Dyeing (BD), National Peroxide (NPL) and Citurgia Biochemicals (CBL) the group companies market capitalisation (M-cap) has gone up by 20 per cent to Rs 1,841 crore over April, 1, 2003.

BIL is expected to do well in the near future on the dint of lower excise duty on biscuits introduced in the 2003-04 budget. In the first quarter to June 2003, it posted a net profit at Rs 28.6 crore on a turnover of Rs 345.5 crore. Its M-cap has grown by 13 per cent to Rs 1,463.5 crore currently. During FY03, BILs turnover was 5.9 per cent lower at Rs 1,329 crore. Its net profit more than halved to Rs 99.1 crore. BILs turnover accounts for 59 per cent of the group companiess turnover and 92 per cent of total net profit of the five listed group companies.

Bombay Dyeing (BDL), which follows BIL in terms of M-cap, has fared well on the back of better petrochemical prices. During the year to March 2003, its net sales (excluding excise) rose by seven per cent to Rs 844.9 crore. The company rode high on healthy DMT prices which ensured a turnaround in the DMT division and the company returned to black with a net profit at Rs 32.2 crore (net loss at Rs 29.1 crore). BDL posted an operating profit of Rs 13.3 crore (loss of Rs 26.5 crore) mainly because of lower raw material cost (adjusted for stock variations). Its share of sales fell from 64.2 per cent to 58.9 per cent. The turnover of textile business fell from Rs 500 crore to Rs 450 crore and loss before interest and taxes stood at Rs 4.7 crore (loss of Rs 11.2 crore).

The Wadias are weighing the exit from Citurgia Biochemicals, which produces citric acid used in pharmaceuticals, soft drinks, confectionaries and food-processing industries. Tough market conditions and cheap imports depressed domestic selling prices and brought margins under pressure. In fact, during the first quarter to June 2003, the companys net loss stood at Rs 4.9 crore, exceeding its turnover at Rs 3.1 crore.

Bombay Burmah Trading Corporation (BBTC) has diversified into IT, research etc. Its M-cap has risen to Rs 56.7 crore currently from Rs 51.7 crore on March 31, 2003. The company clocked a net profit of Rs 91 lakh on a turnover of Rs 32.6 crore.