Electrolux may merge Indian arms

It is also aimed at achieving substantial cost reduction and economies of scale since all the three companies are engaged in manufacture of white goods.

The Swedish company has been operating in India since 1995 and has accumulated huge losses in two of its subsidiaries that is Electrolux Kelvinators Ltd (Rs 84 crore) and Intron Ltd (Rs 36 crore) as on 31 march 1999. The third venture Electrolux Voltas Ltd, a closely held company is, however, making adequate profits, they said.

The merger would, however take a long time since it involved three companies and the necessary approvals from the boards and the shareholders of all of them had to be taken, the sources said.

The merger, sources said, would be in the interest of everybody including shareholders as with the companies coming out of red, they would also be benefited in the form of dividend payout and capital appreciation in their investments.

The merger will also help Electrolux to have a strong hold and a much higher share in the highly competitive white goods markets, company sources said. The group is engaged in the manufacturing and selling of refrigerators, washing machines and compressors through the three companies.

It sells its products under four brands – Electrolux, Kelvinator, Allwyn and Voltas. "Currently the emphasis of the company is to have a strong presence in the refrigerators and washing machines," they said adding that after the proposed merger the group would be the largest player in the refrigerator market.

According to the latest ORG retail survey of refrigerators brands – the three brands Kelvinator, Allwyn and Voltas together have market share of 26.2 per cent compared to 24.1 per cent by Godrej and Whirlpool, they claimed.

The company has already extended its financial year by six months from March 1999 to September 1999. For 12 months ended march 1999, the company reported a loss of Rs 12.21 crore compared to loss of Rs 20.25 crore (audited) in 1997-98.

While Intron has accumulated losses of Rs 36 crore upto March 1999, it reported a net loss of Rs 7.58 crore during the fiscal 1998-99 compared to Rs 4.74 crore in 1997-98. In EKL Electrolux holds 56 per cent, while in the joint-venture company EVL it holds 74 per cent and in Intron the holding is 74.2 per cent.