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Bausch & Lomb India: Will it survive? - Views on News from Equitymaster
 
 
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  • Nov 2, 1999

    Bausch & Lomb India: Will it survive?

    Ever since Bausch & Lomb Inc. sold off its eyewear business, which includes brands like Rayban, Killer Loop, Arnette, Revo to the US$ 1.6 bn Italy-based Luxottica Group, the future of its Indian subsidiary has come under a cloud.

    Bausch & Lomb India (B&L India) is engaged in the businesses of 'Eyecare' (55% market share) and 'Vision care' (sunglasses, soft contact lenses and lens care solution). B&L India enjoys 70% market share in soft lenses and 60% share of the lens solution market. The company was a BIFR case and only turned around in FY97. In FY99, its accumulated losses stood at Rs 22 m (Rs 158 m in FY98).

    Till now the Luxottica Group has sent no indication of where Indian operations of Bausch stand in its list of priorities. Till now it has not bought Bausch's 44% stake in India. The reasons are not hard to find. B&L India is Bausch's only other listed company (except USA). So, to make it a 51% subsidiary Luxottica will have to make an open offer to the public as per SEBI guidelines. With B&L India contributing barely 2% to Bausch's global turnover, India must surely be way down its immediate concerns.

    Another complication in India is that both eyewear and eyecare businesses are integrated. They have common administration, distribution and franchisees. So the take over by Luxottica will be a complex exercise.

    In terms of B&L India’s future, even if Luxottica takes over Bausch’s Indian eyewear business, the real issue will be whether B&L India be able to sustain itself sans its eyewear business, which contributed over 70% to its FY99 revenues.

    These concerns have also affected its performance in the second quarter ended September 30, 1999. The company’s net profit slid by a whopping 98% to Rs 1 m during the period, compared to Rs 36 m earned in 2QFY99.

     

     

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