Return
to Story Page
To print: Select File and then Print from your
browser's menu
FE Investor Bureau
New Delhi, Dec 28: Hitachi Limited's move to pump in Rs 16 crore in Amtrex Appliances could not have come at a better time. With the aircon industry growing at an average rate of over 20 per cent, there is still some room for growth for Amtrex. The Japanese airconditioner major, Hitachi's association with Amtrex has now culminated into a joint venture with both the companies holding an equal stake of 35.2 per cent in the company's enhanced equity of Rs 14.67 crore. Of this, Hitachi will pick up 90 per cent while the balance 10 per cent will be held by Hitachi India Pvt Limited. The joint venture company would launch new models of window and split air conditioners before the summer of 1999.
Although Hitachi Limited has an FIPB approval to pick upto 70 per cent stake in Amtrex Appliances, the former has decided to pick up only 35.2 per cent through allotment of 51,65,490 equity shares at a price of Rs 31 per share. As a result of the fresh issue of equity, the stake of the core promoter, Lalbhai will comedown from 54 per cent to 35.2 per cent. Amtrex has convened an extraordinary general meeting on January 22, 1999 to take up the issue of preferential allotment to Hitachi.
Although Hitachi will offer state-of-the art technology, it will be competing with the other major International as well as local brands. Among the international brands, Carrier already has a big presence in the Indian market with a dominant market share. Other major brands like LG, National and Samsung are also likely to launch their aircon products in the following months before the 1999 summer sets in.
What should encourage Amtrex and Hitachi is that the share of the organised sector in the total aircon business has undergone a sea change and vaulted to as high as 50 per cent from 30 per cent a few years back. The improvement of the share of the organised sector augurs well for Amtrex as well as the other major players like Carrier Aircon, Blue Star, Voltas and Videocon. Rationalisation of duties in the last budget has resulted inthe consumer shift to the organised sector as the duty benefits were passed on to the customers.
The market seems to have got wind of Hitachi's move to pick up a stake in Amtrex Appliances. The company's stock, after peaking at Rs 37 in September this year, dropped to Rs 22 in early December. In the past few days, the company's scrip has shot up from Rs 22 to the current level of Rs 30. The scrip froze at the upper end of the filter on Monday at around Rs 30 on both BSE and NSE.
Amtrex currently ranks third in the aircon business with an established brand and network and the company enjoys close to 10 per cent market share. Following Hitachi's move, the company's name is also being changed to Amtrex Hitachi Appliances Limited. The infusion of Rs 16 crore would be used over the next three years. Amtrex has two manufacturing facilities at Kadi and Silvassa to manufacture room air conditioners as per Hitachi specifications. The funds generated out of the equity dilution will mainly be used to further expandand upgrade these two facilities.
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.
------------------------------------------------------------