The Hindu Business Line : BPL chalking strategic plan for growth

Charting its future
To develop a mission statement in terms of industry, customer segment, vertical and geographical scope.
To identify strategic business units
Allocating resources to SBUs based on the focus areas
To expand current businesses and develop newer ones

Bangalore , April 24

BPL Group, which recently floated a joint venture with consumer electronics' giant Sanyo, is now looking inwards and is in the process of chalking out a corporate strategy for itself to grow its businesses.

Sources close to the company told Business Line that the corporate headquarters of BPL Ltd is designing a corporate strategic plan to guide the whole enterprise into a profitable future. BPL management is also studying portfolio models of enterprises such as Boston Consulting Group and General Electric to determine which businesses need to be built, maintained, harvested or divested. The company expects to put together a comprehensive strategy within four to six months, sources said.

Four activities

The corporate strategy involves four planning activities. The first involves, developing a clear sense of the company's mission in terms of its industry scope, customer segment scope, vertical scope and geographical scope. "A well-developed mission statement provides employees with a shared sense of direction, opportunity, significance and achievement," sources said. The second activity involves identifying the company's strategic business units (SBUs) so that each of them can benefit from separate planning, face specific competitors and be managed as profit centres. The third activity involves allocating resources to the various SBUs based on their industry attractiveness and company's competitive strength. "Several portfolio models, including those by the Boston Consulting Group and General Electric, are available to help determine which SBUs should be built, maintained, harvested or divested," sources said.

The fourth activity involves expanding current businesses and developing newer ones to fill the strategic planning gap.

A large phase of BPL's financial restructuring was completed in December 2005 with settlement of secured creditors and specific outstanding liabilities. This was carried out through proceeds from the sale of BPL's colour TV business for $70 million, an infusion of $20 million from the promoters and $10 million from the sale of BPL's consumer dry cell batteries to Eveready. A total consideration of $80 million was received for the CTV business. This was partly in cash ($70 million) and partly in stock ($10 million). The stock represents 50 per cent stake in SANYO-BPL venture into which the CTV business was transferred. Post-settlement, secured creditors have substantially reduced and stand at Rs 260 crore compared with Rs 1,500 crore on March 31, 2003. Interest liabilities have also proportionately come down, sources said.

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