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Birla VXL pens 3-point recast

Kausik Datta

Birla VXL, the S K Birla group-managed Rs 4-billion textiles company, has chalked out a three-pronged revival plan. The exercise hinges on rescheduling of loans, productivity improvement and rise in market share to put the loss-making firm back on the rails.

According to Birla VXL deputy managing director and chief operating officer C L Rathi, the revival plan, based on the recommendations of Andersen Consulting, was being discussed with financial institutions. The company hoped that it would begin implementation of the plan by June-end.

Sources said an expeditious implementation of the revival plan was required before the company was sent to the Board for Industrial and Financial Reconstruction net.

Since the company's accumulated loss in the 18-month period ended December 2000 eroded more than 50 per cent of its peak net worth in the preceding four financial years, a referral to the BIFR is statutory.

The company has convened an extra-ordinary general meeting on May 22 to place the resolution pertaining to the mandatory referral to BIFR before the shareholders.

They added the management had initiated steps for closer integration of the operations if manufacturing units at Jamnagar and Amritsar to grab a better slice of the domestic market. The company enjoys 19 per cent share of the 55 million meter woolen worsted market.

International marketing will now be given a stronger thrust and there will be more efficient working capital management. The company has featured seven times among the top three exporters of woolen worsted in the past 10 years.

Explaining the reasons for the set back of the company, sources said: "The expansion of Birla VXL's spinning and weaving capacities was financed principally by debts, including foreign credit lines. A setback was inevitable as the demand-supply mismatch did not allow adequate utilisation of capacities and the revenue growth was not sufficient to take care of additional interest burden and fixed costs. The company also bore the burnt of adverse exchange fluctuation."

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