Date:23/02/2006 URL: http://www.thehindubusinessline.com/2006/02/23/stories/2006022303800800.htm

Back Post-Wimco buy, ITC's matchbox business sees big consolidation
Record robust volume growth in Dec quarter

Mohan Padmanabhan

Kolkata , Feb. 22

AFTER the acquisition of majority stake in WIMCO Ltd through its wholly owned subsidiary Russell Credit Ltd late last year, ITC's matchboxes business (built on a 100 per cent outsourcing model) has entered a fresh phase of consolidation, entailing both aggressive outsourcing from the over 44 SSI units in the Sivakasi, Gudiyatham belts of Tamil Nadu, and upgradation of facilities at the existing units of WIMCO.

As of December 31, 2005, ITC has achieved volumes (through outsourcing) close to 230 million matchboxes per month. The company's expanded FMCG portfolio, synchronous with creation of its `Choupal Sagars' in rural India, now includes safety matches, iodised salt and agarbattis.

Some of the popular brands of safety matches marketed by ITC are `Aim', `I Kno', `Vaxlit' and `Delite'.

Mr R. Srinivasan, Member, Corporate Management Committee of the company, told Business Line that consequent to the successful delisting offer and the continuing exit offer (valid up to June 2006) to the shareholders of WIMCO at Rs 53 per share, as per SEBI delisting guidelines, Russell Credit now owns 92.28 per cent of the paid-up equity share capital of WIMCO.

Mr H.N. Sethna remains the non-executive (independent) Chairman of WIMCO, with Mr Rajiv Gopal taking over as MD.

Mr Gopal, is the CEO of the Safety Matches Strategic Business Unit (SBU) of ITC. Other members of the WIMCO board are Mr Suresh Mathur, Mr C.R. Dua, Mr R.L. Auddy, Mr Dipak Dutta, Mr Rajiv Tandon and Mr R. Srinivasan.

Mr Srinivasan said ITC was now closely looking at the quality, safety and productivity aspects of all four existing units of WIMCO, located at Ambarnath (Maharashtra), Kolkata, Chennai and Bareilly (Uttar Pradesh).

Pointing out that the Safety Matches SBU achieved robust volumes growth during the quarter ended December 31, 2005, through continued focus on product quality, enhanced supply chain capabilities and distribution reach, Mr Rajiv Gopal, MD, said the margins have improved on the back of effective cost management and higher realisations.

"We will continue to add value to manufacturers in the SSI sector through technical and management support, to help them achieve superior product quality and processes."