Return
to Story Page
To print: Select File and then Print from your
browser's menu
Our Corporate Bureau
New Delhi, Dec 28: Hitachi Ltd of Japan on Monday announced its decision to pick up 35.2 per cent stake in the Ahmedabad-based Lalbhai family-controlled Amtrex Appliances Ltd. The shares will be issued via preferential allotment.
Hitachi is bringing in Rs 16 crore to acquire 51.66 lakh shares in Amtrex. The company will be pay a premium of Rs 21 on each equity share of Rs 10.
The Lalbhai family will hold an equal stake of 32.5 per cent in the enhanced capital of the joint venture company once the alliance is approved. The equity capital of the company will be expanded to Rs 14.76 crore from the existing Rs 9.5 crore.
The Lalbhai family controls 54 per cent stake in the company at present while the balance is widely held. The company meanwhile is being renamed Amtrex Hitachi Appliances Ltd.
It may be recalled that Amtrex had obtained the Foreign Investment Promotion Board (FIPB) clearance earlier this year to allot up to 70 per cent stake in the company to a multinational manufacturer. The company hadnot disclosed the prospective partner at that point though it was widely beleived the multinational in question was Hitachi.
Subsequently, in April this year, Hitachi stated that it was not yet ready to put investment on ground in the country. The Japanese company, instead, opted to co-brand the Amtrex products as Amtrex-Hitachi. Hitachi has been providing technological assistance to the Amtrex since 1990.
The two companies, at a press conference jointly addressed by Amtrex Appliances managing director Sanjay Lalbhai and Hitachi Home Electronics Asia Pte managing director Yuji Miyamoto, said that the board of the joint venture company will be reconstituted next month
Hitachi will have a few nominees on the board including a joint managing director. Additionally, Hitachi will assign expatriates to work in the joint venture company as managers in the areas of engineering, design and quality assurance.
Amtrex, has meanwhile, convened an extraordinary general meeting on Jaunary 26, 1999, to obtainshareholders approval for the joint venture and other related resolutions.
Amtrex chief executive officer Arvind Nair said the funds brought in by Hitachi would be deployed over the next three years in upgrading the assembly line and in procuring new machinery.
It has been further decided that the joint venture company will follow a dual brand strategy. Hitachi will be positioned as technically superior, high end brand, while Amtrex will be positioned as a mass market brand, with focus on institutional sales.
The Hitachi line would be priced at a premium of 5 per cent to 7 per cent to the Amtrex range. The company will also discontinue the co-branding exercise which had been put into place in April this year.
The dual-brand strategy is expected to fetch the company a market share of 21 per cent in five years from the present share of 10 per cent. Amtrex is the third largest room airconditioner player in the market after Aircon Carrier and Voltas. The joint venture expects the airconditioners market toexpand to one million units in five years.
The company further announced that the Hitachi range of airconditioners would be launched from March 1999. The joint venture company proposes to launch three models in March, another three models in May and four models in September 1999.
The Hitachi models will incorporate new rotary compressors developed and patented by Hitachi Japan. These new compressors, according to company executives, will reduce power consumption by 12 per cent.
The compressor along with certain other critical parts will be imported from Hitachi's facility in Japan. It is expected that the import content in the Hitachi range will be approximately 50 per cent.
Nair added that the company expected to export about 10 per cent of the production in the first year to markets in Saarc region, Middle-East and Africa. The two companies are expected to work together on the export initiative. Incidently, the Amtrex facility is the only manufacturing facility for Hitachi in the tropical region.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
------------------------------------------------------------
This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
------------------------------------------------------------