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IBP in revamp mode; seeks Govt nod for capital issue

C.R. Sukumar

HYDERABAD, Sept. 18

IBP Company Ltd, the Rs 6,810-crore flagship company of the IBP-Balmer Lawrie group, has embarked on a major restructuring programme involving strategies of its finance, business and human resource management.

With a view to ensuring better financial leverage and to help financial restructuring to be completed well before the competitive scenario sets in following the total withdrawal of administered pricing mechanism (APM) by April 2002, the IBP management ha s submitted a fresh proposal to the Government for permitting the company to offer a capital issue.

IBP proposes to offer 1.75 crore equity shares of Rs 10 each at a price to be determined in accordance with the SEBI guidelines either through public issue or by way of private placement of shares. The capital issue is being proposed to meet the investme nts envisaged under the company's perspective plan covering the period from 1997-98 to 2006-07. IBP needs long-term funds for meeting the investment in plan projects, joint ventures and also for meeting the enhanced working capital requirements as envisa ged under its perspective plan.

Stating that the capital issue would be made soon after the receipt of the requisite approvals, IBP sources told Business Line that ``pending clearance from the Government for the proposed capital issue, the IBP board has decided to obtain the approval o f its shareholders for the resolutions of enabling nature at the company's ensuing annual general meeting''.

On the need for taking up an immediate allround restructuring programme, sources said that the company would be required to reposition and gear itself for extreme competitive preparedness since the prices would be governed by demand and supply forces, ma rket trends and competitive advantages in the market-driven pricing era.

``The company is aiming at strengthening its core business area of marketing of petroleum products, which account for more than 95 per cent of its turnover, so as to gain competitive advantage in the wake of the impending de-regulation and globalisation of the Indian economy. The company is also initiating steps for improving its overall profitability through restructuring of other businesses relating to the manufacture and marketing of industrial explosives and cryogenic containers.''

As a part of its financial restructuring programme, the company has already succeeded to a large extent in seeking several changes in the pricing and compensation mechanism from the Government.

``IBP is also concentrating on a suitable financial restructuring strategy with a view to rationalising its joint venture investments and reorganising the capital structure for a more favourable debt-equity pattern.''

Targeting at consolidation of its core businesses, IBP has decided to focus on brand equity and image building, give more thrust to retail operations, increase the share of direct sale of petroleum products, maximise the lube sales, strengthen the storag e and distribution infrastructure, expand the product range, improve the cost effectiveness of operations, enhance foreign earnings by way of increased exports and consolidate non-petroleum business groups, sources said.