Monday, November 19, 2012


The biggest five loss making companies of India
But the reasons are not far to find. A company like Moser Baer is facing huge pricing pressures in the global optical media market; and is also being hit by a Philips licensing issue (with suits being filed by Moser Baer previously against Philips being a bone of contention too). Add to this the fact that the sales volumes of Moser Baer have been more or less flat (Gross revenues for FY08 were Rs.19,654 million, compared to Rs.20,746 million last year). And to search for Deccan’s cup of woes, one just needs to see aviation fuel prices, which have risen over 30% in FY08, enough to kill any aviation company [India’s airline industry in total will see more than Rs.4,000 crores losses]. Critically, due to an attempt to get more revenue out of per seat, Deccan Aviation saw its flight occupancy dip disastrously from 87% to 72% by the end of FY08.

For Tata Teleservices (Mah) Ltd. the issue is direcly related to capital acquisition costs not paying over time. Critically, while Bharti has 62 million subscribers, Reliance is reaching 50 million, Vodafone itself is at 45 million, Tata Teleservices is still way back at 24 million, despite having been in the country for such a long time. It’s quite clear that if there’s such a close run relatively amongst the top three telecom providers, there’s a clearly strategically faulty marketing orientation that has resulted in Tata Teleservices’ subscriber base not coming up. The malaise has been hounding Tata Teleservices (Mah) for the past too many years (we went back only till 2002, and the company has suffered losses since then, year after year). And the biggest factor in cost has been cost of sales rather than depreciation. With an accumulated loss base of Rs.2,544.58 crores, Tata Teleservices (Mah) requires attention, and too fast from the Tata group. And while Wire and Wireless – a Zee group cable television company – filled up its black hole by lending money (almost Rs.63 crores) to partner distribution companies whose net worth stood eroded by the end of the year, Strides Acrolab, a Bangalore–based generic pharmaceuticals company, accounted its losses to huge setbacks in US operations and of course, a surging rupee!

Clearly, unless these companies question their strategic intent, processes and structures extremely critically, it’s simply not possible to come out of a rut in a quarter, a year, or even in a decade. Finally, it’s a matter of business; finally, it’s a matter of shareholders’ money; finally, it’s a matter of whether you reach for that Alprax or not; finally, it’s a matter of never saying die.......till you’re dead!

Source : IIPM Editorial, 2012.

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