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WL Ross asks OCM to wipe out losses by March 2013

OCM India is the second major Indian investment for WL Ross after SpiceJet, where it made 58% profit in June last year by selling its 30% stake within two years from its investment.

, ET Bureau|
Updated: Dec 22, 2011, 06.29 PM IST
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Global private equity giant WL Ross Llc, which bought 94% in OCM India for $37 million in 2007, has set a target to the Indian firm’s new management team to wipe out the accumulated losses by March 2013, said a top official.

OCM India is the second major Indian investment for WL Ross after SpiceJet, where it made 58% profit in June last year by selling its 30% stake within two years from its investment.

The target set for OCM India also includes generating internal accruals sufficient to meet the capital expenditure and image makeover expenses of Rs 75crore-Rs 100 crore over the next five years, said chief marketing and sales officer Nitin Jain.

Disclosing this to reporters in Hyderabad on Thursday, Jain, however, declined to indicate the accumulated losses. “All I can say is that they are less than the investment of WL Ross and the company’s sales turnover last fiscal,” he said.

OCM India, which belonged to the SK Birla group, posted sales of Rs 153 crore, a growth of 33% over the previous fiscal, and has “reported a turnaround with net profits,” said Jain, refusing to quantify the profit.

“The mandate from WL Ross is to continue to report similar annual growth rates and generate adequate profits to meet the capital and marketing expenditure over the next five years,” said Jain.

OCM India has chalked out an expansion plan to augment the capacity at its Amritsar plant to 6.2 million meters a year by March 2013 and 8 million meters by March 2014 from the existing 5.5 million meters.

The mandate of WL Ross to wipe out the losses at OCM need not be seen as its preparations to exit the company, says Jain. “The investments of WL Ross are strategic and long term in nature. In fact, in companies like International Textile Group and International Steel Group, WL Ross has remained involved for around 10 years. Though International Steel Group is now run and owned by Mittal, Wilbur L Ross is still on the board of the company.”

As a part of its plans to revive OCM India at the earliest, the new management team had commissioned a comprehensive market research study covering eight major Indian cities to understand the competitive landscape. Following the findings of the research, the company has decided to focus on the age group of 25-35 years meeting their changing needs of fashion and also spread aggressively into tier-II and tier-III cities across the country that offered large potential, said Jain.

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