Aditya Birla Nuvo (BOM:500303)

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Aditya Birla Nuvo

Aditya Birla Nuvo (ABN) is a diversified company from the Aditya Birla Group, and was formed in FY06 through a merger of Indo Gulf Fertilisers, Indian Rayon and Birla Global Finance. The company is a leading player in the business segments of viscose filament yarn, carbon black, branded garments, textiles and insulators. Over the past few years, the company, through its subsidiaries, has made successful forays into high growth sectors like life insurance, IT services and business process outsourcing.

In FY09, consolidated income from operations grew by 15% YoY on the back of 35% YoY growth in telecom and 37% YoY growth in life insurance businesses. Despite depressed market conditions, the financial services segment grew by 30% YoY. Growth of other business verticals was impacted by the economic slowdown. The operating margins of ABN contracted by 4.2% to 4.4%, while at the net level it reported net loss of Rs 4.3 bn. Profitability was constrained due to start up costs of new roll outs, closure costs and forex losses booked across various segments. Only the financial services segment reported satisfactory performance.

Apart from the focus on old economy sectors like textiles and carbon black, ABN is also putting into place strategies to penetrate deeper into the high-growth markets like telecom, BPO and insurance. It is nurturing growth businesses and increasing their share in the consolidated revenues by deploying surplus cash generated by the value business. The company is targeting a pan India presence in the telecom business to accelerate growth, while growth in existing circles is being targeted through widening of network. It has planned to expand distribution network to gain market share in case of its financial services business. To improve profitability cost control measures and working capital monitoring has been taken across segments.