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A case of dreams gone sour

Kishor Kadam

The Jumbo Group Companies of Manu Chhabria failed miserably in India. In the last five years, the group's net sales declined at a compound annual growth rate of -11.40 per cent to Rs 9.144 billion.

From an aggregate net profit of Rs 1.247 billion in 1995-96 the group registered a net loss of Rs 655.2 million during the year ended March 2001.

During the nine months ended December 2001, the group faired badly with sales income tumbling 63.2 per cent to Rs 3.312 billion and net loss increased to Rs 554.1 million in April-December 2001 from net loss of Rs 368.6 million in April-December 2000.

The major reversal in fortunes was seen in Dunlop Industries. From a net sales of Rs 5.078 billion in 1995-96, the company's sales fell to Rs 939.2 million in 2000-01.

The company's net profit was encouraging at Rs 390 million in 1995-96, but with reversal of fortune owing to labour problem, the company slipped into the red first time in 1996-97 with net loss of Rs 2.318 billion.

However, by 2000-01 it managed to reduce net losses to Rs 893. million. However, with continued losses since 1996-97, the company's net worth sunk to a negative at Rs 1.307 billion from a positive net worth of Rs 4.445 billion.

The group flagship, Shaw Wallace, too faired badly with its net sales down from Rs 90.99 million in 1995-96 to Rs 55.33 million in 2000-01. The company's net profit was comfortable at Rs 700.1 million in 1995-96. But in 2000-01, the company reported a net profit loss of Rs 10.5 million.

The poor performance in the last five years saw the group's net worth declining from a hefty Rs 8.322 billion in 1995-96 to a modest Rs 842.4 million in 2000-01.

The net worth of Dunlop was negative at Rs 1.307 billion from a positive net worth of Rs 4.445 billion. The net worth of Shaw Wallace declined to Rs 909.2 million from Rs 2.230 billion in 1995-96.

On the bourses, the market capitalisation of group companies declined from Rs 3.788 billion in 1995-96 to Rs 2.746 billion as on March 31, 2002. Dunlop has been the major loser with it m-cap down to Rs 104.4 million from Rs 721.6 million.

Shaw Wallace, however reported marginal improvement in its market cap at Rs 2.482 billion from Rs 2.385 billion.

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