Ricoh India to self-sustain itself

It costs $320m to the parent company

Yoshinori Yamashita, President & CEO, Ricoh briefing on the decision to stop support Indian business unit.

Mr. Yoshinori Yamashita, President and CEO of Ricoh Company Ltd., Japan, during a press meet on Friday said, the liquidation of Ricoh India to a certain degree. This seems to be the fallout of Ricoh Japan having confirmed withdrawal of all financial support to Ricoh India, listed in Bombay Stock Exchange-listed subsidiary handles general Indian operations, chiefly multifunction printer sales and maintenance services. It still continues to be in red and also deterioration of its relationship with its major customers, directly effecting its business operations.

Ricoh Japan had continued to provide requisite financial assistance to its subsidiary in India over the years, including current recapitalization, however the revenue and profits of the Indian subsidiary has been consistently declining even after change in senior management and executives being sent from Japan for restructuring business operations.

The parent company on Friday revised its mid-year forecast to a loss of 7 billion yen as compared to the original projection of a profit of 3 billion yen. Operating profit was also revised to 10 billion yen from 18 billion yen.

The above sudden move by the parent company may have been taken considering continuous under performance of the new management, dwindling profits, deteriorating customer and vendor relations, even after recapitalization by Ricoh Japan. After the new management took over, a serious drift in relations started with major customers and vendors to the extent that a IT vendor filed a Insolvency petition against Ricoh India. This may have triggered the pull out by Ricoh Japan considering that the Indian arm is not going to recover from the current crisis and any further liability on account of such actions of the management will have to be borne by the parent company.

Ricoh has now decided that the situation will be difficult to remedy and is subsequently ending its support. When asked whether the Indian unit will be liquidated, Ricoh President and CEO Yoshinori Yamashita replied, "I expect so to a certain degree.” Lastly, with the current situation looks difficult for Ricoh India to bid for new business as the parent company severing its relations with the Indian arm.