ITC Ltd has closed down two of its Wimco factories at Chennai and Ambernath engaged in the safety matches business, according to its Chairman, Mr Y.C. Deveshwar. The company has already effected a voluntary separation scheme at both these factories to enable better leveraging of underlying asset base.
“Wimco in its present form did not perform well so we are restructuring it. We have closed down two units and we plan to use that infrastructure for manufacturing newer products,” he said.
Wimco Ltd posted a net loss of about Rs 60 crore during the financial year 2010-11 against Rs 16 crore during the year-ago period, according to information available in the company’s annual report. This was primarily on account of one-time separation costs amounting to Rs 37 crore and a steep increase in input costs.
The continued tax differential between mechanised and non-mechanised sectors was the primary reason for the poor performance of Wimco, he said. The company was therefore forced to evaluate alternatives to arrive at a viable business model.
The margins in the matches business also continued to remain under pressure due to sharp escalation in the prices of raw materials, primarily wood, splints, paperboard and key chemicals, the report said.
Wimco Ltd was acquired by Russell Credit Ltd, a 100 per cent subsidiary of ITC, on July 1, 2005.