Crompton Greaves sets a trend.
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cgl.co.in
Sanjay Kular(ET)
MUMBAI 9 JULY
IN A trend-setting move, the Rs 1,800-crore ($418m) Crompton Greaves, flagship company of the L M Thapar group, has begun disclosing division-wise profits, or the performance of each of its strategic business units (SBUs) in its annual statement to shareholders.
Crompton Greaves is one of the few large companies to reveal various details of its financials — sales, operating profit and pre-tax profits — in its annual statement.
“Even giant companies like Hindustan Lever, Reliance Industries, Larsen & Toubro, Bajaj Auto, MICO, Grasim and several others do not give business unit-wise financials (including profitability) in their annual reports,” said an analyst.
Speaking to The Economic Times, company sources said, “The entire objective is to become as transparent as possible so that shareholders know each individual business unit's performance and act accordingly. We are the only company in our industry to depict SBU-wise sales and profit figures,” they claimed.
Crompton Greaves has four SBUs — power systems, industrial systems, consumer products and digital. In '98-99, the company as a whole recorded a growth of 6 per cent in sales to Rs 1,791 crore (Rs 1,690 crore) and profit before tax (PBT) rose 17 per cent to Rs 24.12 crore (Rs 20.62 crore). The net profit was up 7 per cent to Rs 23.12 crore (Rs 21.52 crore).
The first three divisions recorded a profit before tax while its digital or informatics division reported a huge loss. The sharp turnaround in its consumer products division has helped the company to improve its bottomline during 1998-99.
During the year, the consumer products division, which represents 26 per cent of aggregate sales, earned a PBT of Rs 3.51 crore as compared with a loss of Rs 8.48 crore in the previous year.
“Profitability has increased significantly during the year due to operational efficiencies,” said the annual statement.
The digital division saw a huge loss of Rs 24 crore (Rs 25 crore) although the unit's sales constitute only 4 per cent of the company's sales. The company expects a substantial improvement in its results of the digital division in coming years.
In the power systems division (which accounts for 36 per cent sales), PBT dropped 14 per cent to Rs 19.15 crore (Rs 22.30 crore) and industrial systems' (constitute 34 per cent of sales) PBT fell sharply by 21 per cent to Rs 25.03 crore from Rs 31.70 crore. |
