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Matsushita moves FIPB to buy Dhoots out

Partha Ghosh

After receiving government approval to increase its shareholding in Matsushita Air Conditioners India Pvt Ltd from 70 per cent to 90 per cent, Matsushita Electric Co of Japan, has now approached the Foreign Investment Promotion Board to acquire the balance shares in the joint venture held by the Dhoots of Videocon.

In the previous acquisition scheme, which was approved by FIPB barely a month ago, Matsushita Electric had proposed to pump in Rs 725 million to increase its stake from 70 per cent to 90 per cent. The total deal is expected to be of the size of Rs 850 million, including the premium on the shares.

As reported by Business Standard earlier, the Dhoots had agreed to exit the venture totally if they got a proper valuation of the 30 per cent shareholding they owned in the Chennai-based firm which manufactures window and split air-conditioners under the 'National' brand name.

Videocon Chairman V N Dhoot had demanded a price of Rs 800 million for his stake. The total paid-up equity capital of the joint venture is Rs 350 million, of which the Japanese firm holds 70 per cent while the balance shares are held by Dhoot Trading and Agencies Ltd.

After the acquisition is completed, Matsushita Air Conditioners will become a wholly owned arm of the Japanese firm. The additional infusion of funds comes at a time when the air-conditioning industry is hoping for a revival during the ensuing summer months.

It has already accumulated losses of Rs 330 million, and is facing severe competition from players which have cut prices in a bid to gain volumes in a tough market.

The Indian AC market grew by around 8 per cent in 2001 as against a growth of 32 per cent in 2000. But as companies had bought inventories for 2001 based on the year 2000 sales, they had to cut prices by around 15-20 per cent to woo customers in a depressed market. Sales of the National brand was impacted, sources said.

But though Matsushita was willing to infuse additional funds to revive the company's fortunes, the Dhoots declined to put in additional investments. The two partners, therefore, agreed to part ways.

Panasonic seeks nod for mobile phone imports

Matsushita Electric's wholly owned consumer electronics and durables marketing subsidiary National Panasonic India Ltd has sought FIPB approval to import and market the Panasonic range of mobile phones in the country.

A source said, previously the firm was selling mobiles under an import license obtained from Directorate General of Foreign Trade.

However, that has expired. The company has approached the FIPB to seek a clarification on whether it can import and sell cellular handsets in the country, with requisite amendments in its foreign collaboration approval letter.

National Panasonic sells TVs, audio products and consumer durables being produced in India by Matsushita's manufacturing arms, sources said.

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