It’s Liquidation Time at Bhoruka Gases: A Case Study

Abstract

The Bangalore based Bhoruka Gases, one of the Industrial houses, has scripted a perfect turnaround story following its management’s restructuring efforts and financial restructuring of the business. Rust had not only settled down on machines and costly plant equipment, but deeply blurred remote hopes of any rebirth, three long years. Promises in the past were galore, but were never kept. The year 2003-04 had been a record-breaking year for Bhoruka Gases which was also a year to remember as this accomplishment came after several setbacks since 2000. Bhoruka Gases started losing its financial stability since 2000, despite the record-high energy prices and increasing world appetite for gases. For the management those were challenging times. Undeterred by obscurity, a comprehensive restructuring programme was chalked out. To revive its fortunes, in 2004, Bhoruka Gases implemented several restructuring strategies; these strategies included financial restructuring, better quality of product, change in the management and the like. The loss making Bhoruka Gases has altered itself into a healthy profit-making company in a span of four years due to these strategies. It posted a net profit of Rs 17.64 Crores on net sales of Rs.35.92 Crores in 2004-05 as against a net loss of Rs 4.22 Crores on sales of Rs 32.03 Crores in 2000-01. The company registered a turnover of Rs 34.92 Crores for the financial year 2005-06. This way, the company was able to come out of BIFR (Board for Industrial and Financial Restructuring) in 2005.