Birla 3m Still Weighing Pune Unit
Birla 3M, which is planning to set up a new unit at Pune for the manufacture of its Scotch-brite, Post-it and Nomad products range, is studying the current economic situation before firming up a date for setting up the plant.
"The project is active. However, we are reviewing the plan in the light of the economic and the currency situation in the country," Birla 3M senior general manager, Kishore Rao, said.
Birla 3M is a joint venture between the Yashovardhan Birla group and the $15-billion 3M. The company has already bought 25 acres at Pune for setting up the plant. At present, the company has a seven-acre facility near Bangalore.
Nearly 22 per cent of 3M's profits come from Asia. Rao said the company was going slow on recruitments in India because of recessionary trends. "We are adding marginally in key areas," he revealed.
Worldwide, 3M has either cut jobs or has frozen further recruitments because of the economic slowdown in Asia.
Rao said the company will focus on industry, auto after-care, abrasive, healthcare and office market segments for the next year. Birla 3M sells around 800 products in India. Rao said in certain segments, where the government is the largest buyer, price becomes a prime issue in awarding the tender. Hence, the private sector takes prime importance in those segments.
He said educating the consumers is given importance because some of the company products were new to the Indian consumers. "Part of our job is to educate the customers. It is a process which takes time," Rao said. He said there have been cases where some of the products manufactured by the company have ended up becoming commodities. "For example, we introduced audio, video tapes. But once it became a commodity, we sold off the division," he said.
The company expects to maintain a compounded annual growth rate of 30 per cent. During the first quarter of 1998-99, net profit registered a rise of between 8-9 per cent compared with the corresponding period of the previous year. Net profit grew from Rs 1.02 crore to Rs 1.11 crore on sales of Rs 27.73 crore during the first quarter of 1998-99 compared with Rs 20.90 crore during the same period last year. Net sales grew around 32 per cent.
Interest cost went up from Rs 47.82 lakh during the first quarter of 1997-98 to Rs 1 crore during the same period in 1998-99. During 1997-98, the company made a net profit of Rs 4.04 crore compared with Rs 2.84 crore the year before. Net sales rose to Rs 101.43 crore during 1997-98 compared with Rs 86.65 crore the year before while interest cost increased to Rs 3.11 crore during 1997-98 compared with Rs 1.06 crore. Birla 3M's share price is currently quoted at Rs 237.