BPL plans comeback in communications biz

BPL, which once ruled the Indian consumer appliances segment, including the push-button fixed-line handset phone market, is charting a measured comeback into the handset market. The Bangalore-based publicly-held company plans to invest up to Rs 40 crore in this segment. It also plans to manufacture a host of communication-related equipment, such as power line carrier communication terminals, wave traps, protection and outdoor couplers, EPABXs.

“To expand business interests, reap the benefits of a higher turnover and explore potential growth, BPL is proposing to make an additional investment of up to Rs 40 crore in equity and/or redeemable cumulative preference shares of a group company — BPL Telecom,” said a BPL spokesperson. He added this was part of the company’s reorganisation plans and the investments would be sourced partly from internal accruals or a private equity investor, and partly from disposing of non-core assets.

Bharti Group-owned Beetel is a major player in the push button handset market, which is dwindling due to the mobile handset market onslaught. According to estimates by Voice & Data magazine, total wireline subscribers fell from 34.7 million in March 2011 to 33.4 million this year.

OPERATIONS LINE-UP

• Consumer products - Consumer durables (through a brand licensing pact), consumer lighting, smart home
• Health care - Frontline diagnostic medical equipment, point-of-care equipment, medical emergency services
• Energy - UPS/invertors, solar power grids & home systems, thermal power generation
• Communication - Energy utility communication, enterprise telecom, consumer telecom

The magazine added fixed-line was surviving only due to demand from businesses — enterprises, small office-home office, etc. Connections to homes were negligible, it stated. “Enterprises would prefer a host of fixed-line phones, their services and fixed-line broadband for day-to-day business affairs because these ensure permanent connection. In the case of broadband, it would be guaranteed bandwidth, with speed,” the magazine added.

BPL has drawn a concrete strategy to focus on four businesses — healthcare equipment, communication, energy, and consumer products. The company is also eying presence in the real estate business by leveraging some of its prime properties.

Even as the company is preparing for a staggered comeback into the consumer market, leveraging on the good recall of the ‘BPL’ brand, it is in the final stages of negotiations with Deutsche Bank, after a prolonged debt settlement process. BPL had consolidated about Rs 400 crore of debt towards Deutsche Bank, and to realise the debt, the bank has been selling a slew of real estate holdings pledged with it. It is understood, about Rs 50 crore is yet to be monetised and investment bankers say Deutsche Bank might close the deal by the end of this year.

The company recorded revenue of about Rs 153 crore in 2011-12, while its net profit stood at about Rs 60 crore, primarily aided by sale of realty assets.