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Rising from the ashes

PSU shakes off its debt-ridden past, looks forward to R1,500-crore group turnover in 2015

PSU shakes off its debt-ridden past, looks forward to R1,500-crore group turnover in 2015

Way back in 1863 Scottish entrepreneur Andrew Yule, who was 29 then, came to Calcutta?s busy dockyard to start his business. Fifty years later, by 1913, Andrew Yule was managing 37 companies. After Independence, Andrew Yule was converted into a public limited company in 1948, and as a Central PSU in 1979.

But later , the Andrew Yule Group fell on bad times, with its flagship company Andrew Yule & Company Ltd posting losses from 2002 to 2007. In 2004 the group was referred to the Board for Industrial and Financial Reconstruction (BIFR). It turned around in three years and came out of the BIFR purview in 2007. In 2008, the group posted a net profit of R44 crore against a net loss of R68 crore in 2007. From there on, the group entered a growth trajectory, with the group profit reaching R114 crore in FY13.

Andrew & Co Ltd, the flagship company, reported a net profit of R11.35 crore in FY13 against R11.84 crore in FY12.

The Andrew Yule Group now has five companies under its fold?Andrew Yule & Co. Ltd, Tide Water Oil, Weffil Ltd, Yule Financing & Leasing and Hooghly Printing. Out of this, three are listed companies?Andrew Yule & Co Ltd having engineering, electrical and tea divisions; Tide Water Oil, producing the Veedol brand of lubricants; and Yule Financing.

Andrew Yule chairman and managing director Kallol Datta said there was virtually no government hand-holding in reviving Andrew Yule. ?It is our own corporate plan that worked. We hived off some businesses like Disergarh Power Plant, abandoned some industrial products which the market didn?t absorb and fully focused on quality control and delivery commitments. This gave a new life to the PSU,? Datta said. Andrew Yule & Co, earlier having a power division, has been offloading stakes in its power and engineering units. Andrew Yule sold its stake in Phoenix Yule and offloaded its 15% holding in DPSC Ltd.

The sale of stakes in Phoenix Yule and DPSC meant an exit from bad businesses. These two companies were non-performing assets and were actually eating into the profit potential. By the BIFR package, the company would have to sell its stakes in many group companies. But after exiting from Phoenix Yule and DPSC, the need did not arise for further selling in group companies. The stake sales in the two companies fetched Andrew Yule R100 crore, out of which it repaid a government loan of R62.26 crore.

Datta said the BIFR plan asked for selling stake in Tide Water Oil but the Andrew Yule board decided against it. Tide Water achieved 40% plus-production growth and nearly 150% sales growth, over the years, after it came out of the BIFR fold. Profit before tax jumped from R10.09 crore in FY06 to R85 crore in FY10. However, Tide Water?s net profit started falling a after FY10, but it grew 8.5% year-on-year to R62.90 crore in FY13, from R57.92 crore in FY 12. Right now, Tide Water is the highest revenue contributor to the group and it pays handsome dividend to the government every year. With Andrew Yule?s debt burden cleared, offloading its stake in Tide Water is no more on the cards.

The group is into diversified sectors, from tea and lubricants to engineering solutions. Datta said the company?s first focus would be on engineering solution because it offers wide scope for expansion and revenue generation. Second focus is on Tide Water Oil, because it has been giving the best margins. Equally important would be the tea business, since the company has good gardens in Darjeeling, Assam and Doars.

The company is bullish about developing new brands of packaged tea, while also focusing on green tea, organic tea, and existing tea brands?Yule Gold, Yule Red and MIM. ?Most importantly for our tea business, we are constantly in the process of re-plantation, and every year we undertake re-plantation of 150 to 200 hectares of the 5,000 hectares we hold in Darjeeling, Doars and Assam. If things go on this way, tea will continue to give us margins?, Datta said.

He said the company plans to foray into power (non-conventional) equipment manufacturing and also explore opportunities to make system design for controlling air pollution.

Andrew Yule is foraying into wind energy and is awaiting the Centre for Wind Energy Technology?s certification to introduce 5 kilowatt-roof-top wind turbine. The PSU has also tied up with a Russian company for making big industrial fans.

In FY 14, the company has planned a capital expenditure of R40 crore, spread over engineering and tea. But the big investment would come in 2015? around R150 crore when the company would set up a new electrical equipment plant, Datta said

?We are on an upswing. While Andrew Yule & Co?s turnover is expected to cross R500 crore by 2015 the group?s turnover would cross R1,500 crore by then,? Datta said.

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First published on: 03-07-2013 at 01:50 IST
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