Braithwaite profitability may hit in FY'24 as it navigates leadership transition challenges

New Delhi/Kolkata: The remarkable turnaround journey of Braithwaite & Co, the central PSU that built the iconic Howrah Bridge, encountered headwinds in 2023 due to leadership transition challenges.

Net profit, which steadily climbed from Rs 2.6 crore in 2017-18 to nearly Rs 50 crore in 2022-23, may see a dip for the current fiscal.

Till December 2023, profit stood at Rs 17.35 crore, making it unlikely to surpass the previous year's figure in the last (January -March) quarter of the fiscal.

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"Surpassing last year's net profit in the current fiscal may not be achievable. The order book had also shrunk from Rs 2,346 crore in March 2023 to Rs 1,473 crore," official sources told PTI requesting anonymity.

Sources in the company attributed the slowdown to the departure of Chairman and Managing Director Yatish Kumar in May 2023, after he returned to Railway service following a successful five-year stint. "Sales dipped between June and August 2023 to Rs 77.26 crore and Rs 96.82 crore, but recovered significantly under Kumar's leadership, reaching Rs 119.37 crore and Rs 140.63 crore in November and December, respectively," officials said.

An Indian Institute of Management Indore (IIM-Indore) management case study on Braithwaite acknowledged his role saying, "Kumar was made of tougher metal than most (CMDs)."

"On the first day of joining as CMD of Braithwaite, instead of celebrating, Kumar met staff individually, and discussed the company's financial challenges, seeking their preference on salaries, loan or earnings," the study mentions.

"This turnaround story of Braithwaite has become a case study in MBA courses on strategic revival and turnaround strategies. The IIM Indore is already using it. Bennett University is also going to use it," an official said.

Kumar in September was temporarily entrusted with the additional responsibility of CMD till a new chairman takes charge alongside his Railway duties.

Braithwaite's nine-month net sales till December 2023 stood at Rs 835 crore, compared to Rs 1,043 crore for the full year 2022-23. When contacted, Kumar acknowledged that the company's performance dipped during his return to Railways, but asserted that he's been working to regain momentum. He expressed confidence in surpassing targets despite the challenges.

IIM Indore professor (strategic management) Swapnil Garg in his reaction said, "Leader transitions are natural in the long term. During such changes, a temporary dip in performance is acceptable, and efforts should focus on minimizing the impact through strategies like advance planning.

“Braithwaite faced a surprising lack of such measures, navigating both a leadership change and a vacuum. Despite its history, the organization will need a herculean effort from the new CMD." According to company presentation sales have soared nearly 700 per cent since Kumar took charge in 2017-18 and last year, the company became debt-free.

Financial analysis for last five years showed net worth zoomed from mere Rs 6 crore in FY'18 to Rs 200 crore in FY'23.

The success for Braithwaite was in diversification into several new service-oriented verticals from wagon making which was a low-margin business, officials said.

"Wagon was 95 per cent of the business in 2018 but now it has come down to 55 per cent and we had plans to reduce it below 50 per cent. Introducing new revenue verticals was important," Kumar said.

"Civil construction, bridge cranes and operation and maintenance activities proved viable. Container manufacturing, solar PV plants, and Railway station construction are been formed up," he said.

According to plans, Braithwaite had envisaged a roadmap to become a Rs 2500 crore listed CPSU by 2025-26.

Braithwaite, which transitioned from the Ministry of Heavy Industries to the Railways, was twice referred to the Board for Industrial and Financial Reconstruction (BIFR) for revival between 1992 and 2006.

Meanwhile, a full-time CMD appointment for Braithwaite is expected soon. Muhammed Asad Alam, Chief Rolling Stock Engineer (Coaching), SER, has been selected for the post of chief of the engineering major from nine persons interviewed for the post.

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