The management of Walchandnagar Industries Ltd (WIL) is thinking of de-merging its businesses into three separate companies.

If it goes ahead with the plan, then WIL will hold the three subsidiaries, engaged in manufacturing, projects and engineering services.

Today, WIL is into a huge range of disparate businesses – manufacture of sugar and cement machinery, gear boxes, manufacture of products for defence, nuclear and space sectors, and engineering construction services. It has its main manufacturing unit at Walchandnagar near Pune and also runs a foundry at Satara, Maharashtra. The company’s activities easily fall into three buckets.

The vision is to spin off these businesses into separate companies to enable them to grow independently, said the company’s Managing Director & CEO GK Pillai, stressing that the plan was at a very preliminary stage.

For its financial year ended September 30, WIL reported a turnover of ₹627 crore compared with ₹717 crore for the previous year, on which it made a net loss of ₹12 crore, against a net loss of ₹38 crore previously.

Interest costs at ₹48 crore (₹40 crore) were to blame for the loss. Interest costs have been mounting due to receivables piling up – about ₹400 crore.

This, in turn, is due to the projects business where customers withhold payments under some technical pretext or the other.

Pillai believes that splitting the businesses could enable them to attract funds and partners and grow independently.

The aerospace, defence, sugar and cement machinery and gearboxes might come under ‘Walchandnagar Manufacturing Ltd’, while the projects business could be put under ‘Walchandnagar Projects Ltd’. Walchandnagar Engineering Ltd could provide a variety of engineering services, such as design.

He attributes the lower losses of last year to improved operational efficiency, and says that in the current year (ending September 30, 2015) the company would turn in a net profit.

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