Showing posts with label Tata Group. Show all posts
Showing posts with label Tata Group. Show all posts

Monday, November 19, 2012

INDIA'S BIGGEST LOSS MAKERS

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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Tuesday, July 31, 2012

A number of companies that dropped out of the Sensex

A number of companies that dropped out of the Sensex in 1991 are still showing shaky fundamentals. But then again, there are those who have at least mastered the art of survival

ACC remained strong even post-liberalisation, but perhaps didn’t get its due attention from the Tata Group, which sold its 14.4% stake in 2000 to Gujarat Ambuja. Now under Swiss giant Holcim, the company’s revenues are growing at a CAGR of 8.3% over a 4 year period to reach Rs.79.76 billion in FY 2009-10, though profit at Rs.11.2 billion is less by 9.07% of its value in FY 2005-06. Grasim is a more surprising case of a company that was dropped in 2010. Post its consolidation with Ultratech, Grasim is the eighth largest producer of cement in the world with a capacity of 52 MTPA as compared to 8.5 million tonnes in 1995. Even post-demerger of the cement business, Grasim’s total revenue was Rs.46.46 billion in 2010-11 largely contributed by its other key strength – VSF.

The automotive segment has the obvious cases of Hindustan Motors & Premier Automobiles; legacy companies which were like chickens in the headlights when competition intensified. Both remain bit players. The former is still struggling with a consolidated net loss of Rs.505.2 million on revenues of Rs.5.7 billion in FY 2010-11 and the latter posted sales of just Rs.1.71 billion and a net profit of Rs.381.2 million. Ballarpur Industries was another case study that struggled to cope with South East Asian competitors post 1991 till scion Gautam Thapar led an impressive turnaround. Ceat from the Goenka group similarly fell from its perch and was in fact an overleveraged loss making company in 2001. Even today, its net profit at Rs.35.163 billion for FY 2010-11 puts it significantly behind competitors like MRF at Rs.74.63 billion and JK Tyres at Rs.48.31 billion. While the Tata Group owned Indian Hotels is expanding into new segments, its revenues at Rs.16.73 billion for FY 2010-11 are just growing at around 2% yoy since FY 2006-07 and profits at Rs.1.41 billion are in fact down by 56.2% since that year. Siemens India presents an interesting case of an MNC that dropped out of the Sensex. The company suffered from overzealous expansion into capital intensive sectors to go into the red, and also missed the mobile boom to Nokia. It went for a turnaround in the late 1990s and has been showing promise again.

While the new entrants show tremendous promise, it’s hard to say how many of them will stay twenty years hence. It is a rule of the markets that as companies grow larger, they find it increasingly difficult to adapt to market changes. And the new crop that come into their place tends to be better suited to live by the new rules of survival and natural selection.


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