Wimplast Drafts Expansion Plan, Unwraps Rights

On April 29, Bausch & Lomb did what it had been urging consumers for some time: it got on to the other side of a Ray-Ban. In return for $640 million (some Rs 2,750 crore) in cash from Luxottica s.p.a, it agreed to part with its sunglasses business. By taking over the Bausch & Lomb brands (Ray-Ban, Revo, Arnette and Killer Loop), the Italian company was adding to its stable of top-line products, Giorgio Armani, Emporio Armani, Ferragamo, Brooks Brothers, Vogue and Anne Klein.

The American parent's decision to sell out of the sunglasses (or eyewear) business did not come as a surprise to its Indian subsidiary, Bausch & Lomb India. The domestic company got an inkling of change on November 18 last year when it received an internal communication from William Carpenter, chairman and chief executive officer of Bausch & Lomb Inc.

 

The boyish Carpenter's letter noted: "We have been making good progress against our objectives for our eyewear business. Even as these improvements in the eyewear business continue, it is apparent Bausch & Lomb's greatest potential for accelerated growth in the future lies in our healthcare businesses for the eyes."

Unsaid but clear was the intent to exit the just-about-profitable sunglasses business. Of the four lines of Bausch & Lomb's businesses _ vision care, pharmaceuticals, eyewear and healthcare _ the eyewear or sunglasses division worldwide ran up losses of $12.3 million in 1997. It made a profit of just $6 million in 1998 on a turnover of $ 456 million. Comparatively, the vision care business perfor-mance was outstanding: $207 million earnings on $960 million revenues.

In India, the equation is quite the reverse: it is the eyewear business that rakes in the revenues. Over two-thirds of the company's turnover in India and all of its net profits are from sunglasses. The visioncare, pharmaceutical and surgical businesses have a zero contribution to the bottomline as yet. On top of this Bausch & Lomb India still has a Rs 15 crore accumulated loss on its P&L accounts.

Given this, there was a surprise in store for Bausch & Lomb India when the April 29 announcement was made to sell off the sunglasses business. The company's scrip shot up from sub-Rs 90-levels to touch some Rs 120, before settling to Rs 110-115 levels, a near 30-per cent surge.