Financial Daily from THE HINDU group of publications
Friday, Sep 20, 2002
Corporate - Announcements
BPL Engineering shuts down `service division'
HYDERABAD, Sept. 19
IN a significant move, BPL Engineering Ltd, the Rs 148-crore manufacturer of various components, has decided to shut down the operations of its `service division'.
The company is currently into the manufacture of compressors, washing machine motors, speakers, transformers, power cords and coils.
In a communiqué to shareholders, the company said the service business was dependent on getting adequate and continuous business at remunerative service compensation.
"The division was not getting adequate service compensation for servicing the products of other manufacturing companies. Moreover, the overheads were not justifying the turnover being achieved by the division.''
The major factor that forced the company to shut down the service division was the commencement of servicing operations by many of the companies for which BPL Engineering's service division was rendering customer care service.
Many of these companies, which depended on BPL till recently for servicing their consumer durable products, have opened their own servicing facilities to have integration between their sales and service activities.
"As a result of these combined factors, the company was not in a position to sustain its service division activities. Therefore, the company decided that it was not in the interests of the company to carry on the service division business and discontinued the same.''
However, the company informed the shareholders that "the decision could be reviewed as and when there is a change in business scenario for servicing.''
Meanwhile, aimed at gearing up and meeting the phasing-out of the CFC compressors by the Indian refrigerator industry, the company has drawn up plans to increase revenues in other segments. BPL Engineering informed the shareholders that it planned to export compressors to West Asia, Far East and South-East Asia and a part of European Union.
Further, the company also proposed to leverage its expertise in speaker and transformer business by increasing its market share further.
New products such as car speakers and car security systems were ready and the company expected this business to take off during the next year.
BPL Engineering also plans to increase turnover by introducing new products such as multimedia speakers, mobile chargers and house security systems.
Owing to the sluggish market conditions and fall in incomes of service division, the company suffered a setback in both top and bottom lines during the last fiscal.
While the turnover declined to Rs 148.01 crore from Rs 175.31 crore in the previous fiscal, net profit slipped to Rs 3.61 crore from Rs 6.67 crore.
Following certain provisions, writing off of development expenditure, debenture redemption reserve written back and other appropriations, the balance carried to the balance sheet stood at Rs 2.31 crore as on March 31, 2002 against Rs 13.68 crore in the previous fiscal.
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