The Hindu Business Line : Avery India to focus on top-end machines

AVERY India Ltd, the weighing machines manufacturer, expects growth in organised retail marketing to push sales. The company, which has stopped making manual balances, will focus on the top end, according to its Managing Director, Mr Jairaj Singh.

Avery India has introduced three new models of electronic weighing scales and has set up the distribution network. Its focus is on consolidation with growth expected with greater opening up of the market.

It also plans to commence manufacturing fine balances for jewellers and scientific laboratories, another opportunity for growth.

Avery has three major business arms that include weigh bridges for industrial use and weighing machines for the retail segment, servicing arm and petrol dispensers. In the weighbridges, it has a 50 per cent market share but with every major global player seeking a share of this market, Avery will have a tough fight holding its own, he said.

The other segment - petrol dispensers - too will not offer the company major growth for now.

Consider this, he said: In 2002-03 the company's turnover was about Rs 53 crore and the next year, when it made petrol dispensers, the turnover grew to Rs 70 crore, but the operating profit was the same - Rs 5 crore. This segment will drive volumes but not margins for the company.

This leaves the company the only other option, the retail-marketing segment. Here too the growth would not be as much as it would be if the sector were opened up, Mr Singh said.

The apparent slow down in public sector disinvestment, particularly that of oil companies, and non-entry of foreign players in organised retail marketing have dampened the company's growth expectations.

Once these sectors are opened up Avery India's growth will be several fold more than its current expected growth of about 2 - 3 per cent, he said.

If these sectors are opened up, it will not only mean more customers, but more customers who are familiar with the Avery brand thanks to its US-based parent company Avery Weigh-Tronix. Avery India can then access more advanced equipment from its parent, he said.

Avery expects major market development in the West and the South where organised retailing is picking up fast. "We expect some change in the way retail businesses are run. That is why 11 of our 33 regional offices are in the South," Mr Singh said.

The company, which was in the red in 2001 when its losses were around Rs 14 crore, has now generated a surplus. We have shutdown our first factory in Kolkata that manufactured manual weighing scales and the workforce was cut by half to 1,000. All operations were shifted to Haryana. To improve value to the shareholders, the company is reducing its share capital and has announced a buyback at about Rs 35 a share, which is a premium of about 25 per cent. The shareholders who choose to stay with Avery will see better earnings a share, he said.