The smiles are finally back in the sector... or are they???

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Despite their proven metal reserves, the cities of Bokaro, Bhilai, Rourkela & Bellary were largely labelled as qualmish, putrid, bygone & defunct till even the dawn of this century. For long, companies in these regions were performing feebly and were deep in the red, even going to the brink of bankruptcy, exacerbated by the downturn in the sector. This compelled analysts & to write-off this highly capital intensive metal industry and be largely cynical about the comeback potential of this metal industry, especially after the IT boom took over across India.

However, the so called old-world metal sector is back with a bang, breaking all myths and qualms surrounding it. With metal czars scoring astounding profits and announcing elephantine capex plans, all the scepticism from the sector has been alienated and these townships have received a spanking new lease of life. In fact, most of the companies posted their highest ever sales and profits in FY07.

The maximum number of entries in the elite top ten chart of B&E 100 are from the metal sectors only – SAIL (4), Hindustan Zinc (6) & Tata Steel (7) knocking down sun rise and new world sectors like IT, banking & telecom showcasing its supremacy in the Indian economy. Stated S.K. Roongta, Chairman, SAIL on the performance of the company, “Strong demand for steel, market-driven product- mix, higher value-added special steel production and improved techno-economic parameters helped Steel Authority of India Ltd. (SAIL) to achieve a record turnover...” Right from companies in the ferrous metal index to those operating in non-ferrous topography, all are having a gala time. It is interesting to note that the dynamics which led to the downfall of the sector are the ones that have been responsible for its renaissance as well.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Despite rupee appreciation, home markets offer immense opportunities for Indian textile firms!

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Clearly, the sector is on a high and so are the companies. Raymond recorded a net profit of Rs.2.02 billion, mainly pushed by a JV with Belgium’s largest producer of high-end denim, United Cotton. Gautam Hari Singhania, Chairman & Managing Director, Raymond, adds, “We see continued growth in our textile and apparel business with our world-class vertically integrated facilities, strong product development and branding skills. In respect of our JVs, especially in denim, we are working closely with our partners to make the businesses realize their goals.”

Arvind Mills too, at a profit of Rs.1.19 billion, has been riding high after a joint venture with US-based VF Corporation, to design, market and distribute VF’s branded lifestyle apparel in India. But it was Gokaldas Exports that crossed the milestone of Rs.10 billion in apparel sales, a figure that has never been achieved by any Indian apparel firm. In this regard, Vivek Hinduja, CEO at Gokaldas Exports, shared with B&E, “The year 2006-07 enabled us to have a bigger global presence; and we have almost doubled our production capacity in this fiscal.” Expectably, in the time to come, we may see some more companies playing it big in the global arena. One can expect mid-sized companies too participating in this rally, after a series of measures announced in Union Budget 2006-07. The government provided support by allocating Rs.5.4 billion to the technology upgradation fund, giving interest subsidies on term loans up to Rs.2.4 billion, assigning Rs.1.9 billion for integrated textile parks, reducing excise & import duties, customs duties etc. Though the industry is currently going through a rough patch, as issues like rupee appreciation & slowdown in the US had a negative impact on exports, the domestic market offers immense opportunities. For once, India beckons!



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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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The power of unleashed animal spirits

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After considerable brainstorming and some number crunching (alright, we admit it: after a lot of number crunching and soul searching!), the editorial team at Business & Economy and the IIPM Think Tank decided to seal this issue with a KISS! Before you get us wrong, our kiss harks back to that old cliché that says, Keep It Simple, Stupid! In this age of information overload and overdose, people oft en tend to forget that simplicity and brevity can never be matched by jargon and mumbo jumbo when it comes to explaining things. And the final pristine fact is that truly, there can be no other factor more important than the profit figure to assess the current position of any firm, across industries, across geographies. So B&E decided to take net profits as the parameter on which is based our exclusive list of 100 most profitable companies of India.

Readers of Business & Economy are familiar with the fact that corporate India is awash with profits at this moment. Even public sector companies have registered astonishing profits in 2006-07. So while Dalal Street celebrates, we also pay a tribute to a few visionaries who pioneered the rise and rise of India Inc. in the 1990s when pundits had written off Indian companies. Hats off to J.R.D. Tata, Dhirubhai Ambani, Aditya Birla and O.P. Jindal – four men who took profits to a new moral dimension. The dreams they dreamt are turning into a reality now.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Profit from death

IIPM Infrastructure : Campus

Safety, not profit is the need

While the annual death toll of passengers travelling in the Indian Railways refuses to come down amidst the burgeoning profits of the organisation, it would not be entirely improper to raise questions as to whether the zooming profits of the entity is oft en at the cost of the compromising the safety of passengers who have trusted it. The latest report of The Comptroller and Auditor General (CAG) raises precisely that very point. It pinpoints the railways’ ignoring of safety measure just to make profit and condemned it for overloading wagons, which in turn, affects the already bad shaped rolling stock, bridges and tracks. The increased tariff receipt of 15% was achieved by overloading wagons and ignoring the safety standards. The impact of these overloaded wagons on railway track is life taking due to rail fractures and weld failures. The desire of increasing revenue without increasing the freight charges is at the crux of this immature strategy. Could they have been able to compromise on safety of passengers if there was competition in this sector from private entities? Well that’s why competition is not all that bad.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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