Videocon lines up $750 million investment

Videocon Industries has planned aggregate investments in the range of $500 to $750 million in tranches for its glass panels, components and energy-related businesses. The company proposes to tap the low cost international debt /FCCB market to fund the investments.

The size and terms of the instruments will be decided in consultation with investment bankers such as Barclays, Development Bank of Singapore, Lehmann Brothers and Credit Lyonnais Securities.

In September 2005, the company completed the acquisition of Thomson SA’s colour picture tube facilities in China, Poland, Mexico and Italy.

Following the takeover, the company’s manufacturing capacity increased to around 22 million units of CPT and 4 million units of CPT glass.

The company plans to make the facility in Italy as its display device technology hub of Videocon’s operations with the addition of flat panel display lines.

The focus is also on to integrate its operations of its world class CPT glass base near Bharuch, Gujarat and the CPT facilities worldwide to derive huge advantage of low cost glass inputs for CPTs facilities worldwide.

A major expansion and upgradation of the Indian glass plant is under way to boost its current annual capacity of 17 million glass panels to 28 million by 2006 end. The company will emerge as a principal supplier of glass panels overseas in CPT manufacturing.

Recently, Videocon had also acquired Electrolux AB’s stake in its Indian subsidiary, Electrolux Kelvinator Ltd, along with its three manufacturing facilities in India and a clutch of three premium brands; Kelvinator, Allwyn and Electrolux.

The company intends to become a supplier of compressors and electric motors to Electrolux’s global operations.

The company is gearing up to expand and upgrade its facilities to manufacture these components to meet international standards and specifications, and Electrolux’s stringent design requirements.

Videocon is also a part of the consortium that operates the Ravva oil & gas fields in the Krishna Godavari basin off the coast of Andhra Pradesh.

It has a 25 percent participating interest in this project that produces 50,000 barrels of oil per day. At $0.95 per barrel, the operating cost of the project is among the lowest in this sector. And at current crude prices, this asset generates net cash accruals of over $100 million per annum.

600450 Videocon lines up $750 million investment
Date: 3 January 2006

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