The Hindu Business Line : Universal Cables on diversification path

The M.P. Birla Group company, which pioneered the manufacture of power and telecom cables in India four decades ago, is proposing to enter several new sectors.

The board has passed the necessary enabling resolutions at the company's 59th annual general meeting for the necessary changes in memorandum of association of the company.

The board has also decided to hive off its optical fibre cables factory at Goa. According to the company's Web site, Universal Cables started production of optical fibre cables in 2001. The annual report of the company explained that this unit is closed as it is "severely affected by poor demand". So, it wants to "close the operations" and "sell the assets".

Universal Cables has identified seven new areas that are unrelated to its present operations profile. It explains that the new areas can "conveniently or advantageously be combined with the existing activities of the company" for future growth.

For the year ended March 31, 2004, Universal Cables increased its turnover marginally to Rs 137 crore from Rs 135 crore (2002-03), but its net loss increased to Rs 4.17 crore from Rs 4 crore.

According to the resolution passed at the AGM, Universal Cables wishes to deal in items as varied as forgings, castings, mouldings, auto parts and spares to PVC pipes, sheets, resins, plastics and high-density polythene products. It even wants to deal in ferrous and non-ferrous metals like iron, steel, aluminium, brass, tin, nickel, special steel and others.

It further wishes to "to carry on the businesses of iron masters, steel makers, steel converts, colliery proprietors, coke manufacturers, miners, smelters, refiners, engineers, tinplate makers and iron founders, boiler makers, millwrights, machinists and smiths in all their respective branches."

Only one of the proposed new business areas is linked with the company's current activity.

Universal Cables wants to become a turnkey engineering concern for the erection and installation of telecom cable networking systems.

Perhaps, the most interesting point is the company's proposal to diversify into agricultural products like mushroom and dairy items such as milk, cream, cheese and butter. The list also includes corn, hay and straw.

It even wishes to "cultivate, grow, produce, treat, process, store, import, export" poultry, fruits, vegetables and cash crops.

The chemical and petrochemical sectors are also under consideration.

Here it wishes to produce and trade phosphorus, chemicals, plastics, drugs, colours, paints, glues, gums, varnishes and laboratory re-agents among others.

Business Line made several attempts to contact Mr D.R. Bansal, Chief Mentor and Manager of Universal Cables, for clarifications of the diversification proposals, but without success.

According to the company's annual report, the operations of Universal Cables were adversely affected due to over-capacity in the power cables sector and continued demand recession.

However, the company hopes that its fortunes will change with the passage of the Electricity Bill 2003.