The move is in line with the management's aim of achieving its newly set realistic targets, with a clean slate. Kirloskar Oil is now expected to register a growth of between 3 per cent and 5 per cent per annum and a higher productivity norm per employee.

Company chairman and managing director Atul Kirloskar said Kirloskar Oil's export performance during the first quarter, April-June 1998, was heartening, since it notched exports worth Rs 10 crore in that period, against exports worth Rs 15 crore during the full year 1997-98. While the internal projection for turnover for the first quarter had been Rs 151 crore, it had achieved a turnover of Rs 148 crore and a profit of Rs 50 lakh, against an internal projection of a loss. This was critical since the company has never achieved a first quarter profit, he added.

The receivables and old debts written off were mainly related to old inventories. Some of these were from Prashant Khosla, which was reverse merged with the company a couple of years ago, spares for engine models it no longer manufactures and some old debts.

The fact that the top level management has decided to give cost reduction a major thrust is apparent from the induction of a joint managing director, Gautam Kulkarni. Kirloskar said his expertise was in finance and the stock markets.

The cost reduction exercise is part of an internal restructuring programme kicked off in the last fiscal, under which the company initiated a major exercise in cutting costs and getting its receivables in line. Other aspects involve rationalising the number of suppliers, improving their quality, shorter delivery times to bring down costs of raw material, which account for as much as 70 per cent of product costs. Kirloskar said delivery times will be brought down to weekly from the present monthly level.

The targets set for the current year include lowering costs of raw materials by about 3 per cent and interest costs by 3 per cent, while sales per employee are expected to rise to Rs 50 lakh, from the present Rs 20 lakh. Kirloskar stressed that cost reduction was an on-going exercise, accepting that the Rs 50 lakh sales per employee target will not be reached this year.Accepting that Shivaji Works and Kirloskar Ferrous were two issues that continued to be drain on the company, with the former having become a BIFR company last year, Kirloskar said the only way was to look for new areas in the non-automotive business for the ailing subsidiary. Exports was another avenue that Kirloskar Oil is exploring for both the subsidiaries, he added.

Kirloskar Ferrous, which shut down one furnace and is now running only one furnace on borrowed coke, will need `significant' cash infusion. This, Kirloskar said, could be through partnerships, since the group has decided not to pump in more funds. Other options being explored include spinning off divisions.

Insight

In a move described as `sharing responsibility' vice-chairmen and managing directors of big Kirloskar group companies will take over as chairmen of their companies, following group chairman Vijay Kirloskar's election as vice-president of the Confederation of Indian Industry (CII).Among the first of the group's `biggies' to have implemented the change is Kirloskar Oil Engines Ltd, with Atul Kirloskar becoming chairman and managing director, at a board meeting last week. Prior to this, he was the company's vice-chairman and managing director. The two other Pune-based companies, Kirloskar Brothers Ltd and Kirloskar Pneumatic Ltd are expected to follow suit.Vijay Kirloskar will continue to be chairman of the group's Bangalore-based companies.The move follows discussions held after Vijay Kirloskar's election since it is expected that he will be occupied with issues connected to the CII for the next couple of years.For KOEL, there was another boardroom change with the induction of Gautam Kulkarnias joint managing director, from Kirloskar Brothers Ltd.