Sujana Universal in restructuring mode

May either demerge its businesses or bring in more divisions.

Sujana Universal Industries Limited (SUIL), part of the Hyderabad-based Rs 3,070-crore Sujana group, with interests in diverse areas like manufacturing of domestic appliances, castings, bearings and in international trade, is mulling either demerging its four businesses or bringing in more divisions into the company.

Incorporated in 1986, SUIL is taking a cue from the demerger of the towers division of its group company Sujana Metal Products Limited into a separate listed entity – Sujana Towers Limited – in 2006 which has been yielding positive results posting a net profit of Rs 54 crore for the year ended June 30, 2008, as against Rs 39 crore pre-demerger, VSR Murthy, group director, told Business Standard.

“A loud thinking has been going on internally to implement restructuring measures with a view to extracting better results. The plan, however, is now in a fluid state and will take shape by the end of next month,” he said, adding that the company, which follows a July-to-June financial year, will extend its fiscal year to September 31, 2008.

SUIL, which manufactures fans under the ‘Padmini’ brand, has two facilities at Jeedimetla on the outskirts of Hyderabad to manufacture stator winding, rotor die casting, cover making and elctro plating. It had signed an agreement with Bajaj Electricals Limited to become the latter’s original equipment manufacturer (OEM) supplier in 2005.

Murthy said the domestic appliances division had only been catering to the four southern states and now plans to enter northern states.

“We are currently weighing two options – to set up our own production facilities or go for acquisition of smaller players in the region. The proposal will be put forth to the board of directors of SUIL next month,” Murthy said while refusing to spell out further details.

The company, for the 12-month period ended June 30, 2008, reported a net profit of Rs 23.66 crore, as compared with Rs 21.90 crore, reflecting a growth of 8 per cent, while its net income grew 4.39 per cent to touch Rs 954.13 crore, as against Rs 913.98 crore.

At present, SUIL’s domestic appliances division contributes around 17 per cent to its overall revenues, while the other three businesses constitute the rest.

“The revenue equations will change post the restructuring exercise at SUIL. We expect to maintain the same growth momentum with revenues of Rs 1,200 crore for the 15-month period ending September 31, 2008,” Murthy said.

The scrip of the 22-year-old company is currently trading at Rs 13 per share of Rs 5 on the BSE and NSE.