Date:14/08/2004 URL: http://www.thehindubusinessline.com/2004/08/14/stories/2004081402850100.htm

Back BPL plans co-branding exercise with Sanyo — Debt restructuring to be over by Sept

Boby Kurian

Mr Ajit Nambiar, CMD

Bangalore , Aug. 13

THE domestic consumer durables major BPL Ltd, which hived off its mainstay colour television (CTV) business into a 50:50 joint venture with Japan's Sanyo, said it will enter into a co-branding exercise with the global giant and has a plan to regain the top slot in the television market in the next three years.

In an interview with Business Line, Mr Ajit Nambiar, Chairman & Managing Director of BPL Ltd, said, the joint venture products will be co-branded.

"The new company has been given complete freedom to decide on the use of the two brands, BPL and Sanyo. The mandate is to regain leadership in CTV business within 3 years," he said while adding that "various options are being considered on how best the two brands can be utilised for achieving this. Consumer and trade insights are being evaluated and a final decision on this is expected to be taken by August end."

Mr Nambiar, who will be the Chief Executive Officer (CEO) of the joint venture, said, Sanyo executives will occupy the posts of Chief Operating Officer (COO) and Chief Financial Officer (CFO).

"The name of the company will be decided by this month end and the board strength will be six, three from each side," he said.

Mr Nambiar added that the joint venture company was not restricted in any manner to selling only CTVs and could get into any product category, be it in Brown Goods or White Goods. "However, the initial focus would be regaining market leadership in CTVs," he said.

The joint venture's manufacturing infrastructure will also be used to produce cost effective CTVs to Sanyo's OEM customers in Europe and West Asia.

Mr Nambiar said BPL Ltd's prolonged corporate debt restructuring exercise involving over Rs 1,300 crore was likely to conclude by September end and added that no debt from the company will be transferred to the new venture.

"The cash being paid to BPL for the purchase of the CTV business is to be used to partially pay off the restructured debts. The partnership with Sanyo gives BPL Ltd $80 million (about Rs 368 crore at current exchange rates), of which $70 million (about Rs 322 crore) will be used to meet commitments towards lenders and creditors," Mr Nambiar explained.

He added that settlement of the lenders' liabilities is the first and most important step in the successful completion of the restructuring exercise of BPL Ltd.

"The majority of the debt is being retired on a one-time settlement basis. The remaining debt will be restructured for repayment on a long-term basis carrying reduced interest rates," he noted.

Mr Nambiar said BPL Ltd will arrange to repay the balance debt with funds raised from divestment of non-core business, fresh borrowings from international borrowing markets and cash flows from other key businesses such as wireless communications solutions (mobile handset business), soft energy, health care, engineering and manufacturing solutions.