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Selloff spurs capacity expansion, investment

Abhilasha in New Delhi | August 09, 2003 10:03 IST

Post-divestment, almost all the companies have enhanced capacity utilisation, diversified product lines and seen increased investment for expansion and market development.

For instance, the Zuari-Maroc combine, which acquired Paradeep Phosphates, has added three more products to the company's portfolio in the past six months.

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The company was recently awarded the ISO 14001 certification for its environment policy and systems.

Paradeep, till it was government-owned, had just three products. Its installed capacity is set to increase from 720,000 tonnes to over 1 million tonnes in the current financial year.

Modern Food, acquired by Hindustan Lever Ltd, has already launched a new variety of bread, Modern Atta, and plans to introduce high-fibre sugarless and multi-cereal varieties of breads.

Hindustan Lever has invested Rs 80 crore (Rs 800 million) in modernising Modern Food's operations. The expenditure on market development, too, has risen considerably from Rs 6 crore (Rs 60 million) in 2001 and Rs 6.25 crore (Rs 62.5 million) in 2002.

CMC, till its sale, was known only as a systems integrator for government bodies although it specialised in a host of activities.

CMC Managing Director S S Ghosh said the company was now working in tandem with Tata Consultancy Services and had leveraged its domain expertise to service international clients.

Sterlite Industries Ltd, which picked 26 per cent in Hindustan Zinc, has drawn up a Rs 1,500 crore (Rs 15 billion) expansion plan, which includes a 150 Mw captive power plant, doubling capacity of existing mines and setting up new smelters and plants.

Expansion plans for Balco, also acquired by Sterlite, include quadrupling production capacity from 110,000 tonnes to 400,000 tonnes in its Korba mine.

The company also plans to set up a 600 Mw captive power plant. Work on the Rs 6,000 crore (Rs 60 billion) plan has started and is expected to be completed by 2005-06.

When Reliance purchased 26 per cent of the government's equity in IPCL on May 17, 2002, it became the largest petrochemicals player in the domestic market.

It introduced cost-cutting measures, which boosted the bottomline in 2002-03. All the three manufacturing complexes at Vadodara, Nagothane and Gandhar are now operating at full capacity.

Both Hindustan Teleprinters Ltd and Videsh Sanchar Nigam Ltd, the two telecom companies divested by the government, are grappling with competition.

To tide over the crisis, HTL, under Himachal Futuristic Communications Ltd, is foraying into new products like wireless-in-local-loop, intelligent network systems, dense wave division multiplexing.

The next year will see investment to the tune of Rs 25 crore (Rs 250 million) and the turnover is expected to touch Rs 600 crore (Rs 6 billion) from Rs 400 crore (Rs 4 billion) now.

VSNL has time till March 2004, when its agreement with Bharat Sanchar Nigam Ltd and MTNL to route international traffic through its network ends.

The company has, therefore, proposed to the communication ministry that BSNL buy out its international long-distance infrastructure instead of duplicating it.

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