RPG Group Turnover To Get A Boost From Power, Tyre

Mumbai, July 23 | Updated: Jul 24 2002, 05:30am hrs
RPG’s core businesses like power and tyres are set to prop up the group’s turnaround, even as its new economy businesses look out for new growth avenues.

The group’s overall turnover has grown by 4.5 per cent to Rs 6,690 crore from Rs 6,400 crore last year. Of the total turnover, power and tyres contributed 39 per cent and 30 per cent, respectively.

RPG’s utility major CESC has got a boost from a recent Calcutta High Court order awarding the company its long pending tariff increase. “We are hopeful that the development will change the complexion of CESC. The net effect of this to the topline will be an additional Rs 300 crore in revenues every year. We will have to see how we make use of this positive development,” RPG group chairman Harsh Goenka told The Financial Express.

Mr Goenka answered in the affirmative when asked whether the group was open to bidding for state-owned transmission companies that may come up for disinvestment. Other group companies dealing in power are RPG Transmission, KEC International, NPCL and RPG Cables. RPG group’s other flagship company CEAT turned the corner with a profit of Rs 3 crore in the year ended March 31, 2002, as against a loss of Rs 14 crore in the previous year. The company’s market share in tyres has increased by 4.5 per cent to 19 per cent, indicating that the turnaround strategy has worked. The increase in market share has been aided by the auto sector looking up.

With assets worth around $1.8 billion, the RPG group has been one of India’s fast growing business conglomerates and has major presence in retailing, entertainment, life sciences, information technology, power, tyres, telecommunication, among others.

The RPG group’s business portfolio is clearly divided into the old economy and new economy businesses. Under new economy, the group has a strong presence in communication, which contributes 13 per cent to its turnover, retail, contributing nine per cent, life science, which contributes seven per cent to the turnover, and entertainment with two per cent.

After hiving off its chemicals division, RPG Life Sciences — which is into bulk drugs, OTC, bio-technology and fermentation — has filed for an international patent for cyclosporin formulation. It is also targeting the generics market for drugs which would go off patent.

In IT and communications, the group is bullish about software firm, Zensar. The company is eyeing acquisitions abroad, and is also chalking out plans of specialising in BPO.

The group is laying a major thrust on retailing, said Mr Goenka. The group companies involved here are Foodworld, Musicworld, Giants, Health & Glow, HamaraCD.com, Saregama, and Spencer’s — covering grocery, music, wholesale, drugstore and online music. While Health & Glow is being given a facelift to suit consumer needs, at a time when the company has reported a profit, Giants, the cash and carry hyper market at Hyderabad, plans to set up 8-10 more hyper market stores across India. However, last year the group went slow on entertainment, with issues of piracy looming large. A renewed effort has been made to fight piracy and tackle competition in the music sector with competitively priced CDs.

Having made a small beginning in Tamil Nadu, the company is now foraying television software in a big way. Mr Goenka said that the company is also looking at the small budget films sector to explore growth.