Amtrex Appliances

The market has been speculating that Hitachi of Japan which is the technical collaborator may be offered the stake. This move would make sense as Amtrex sources hydro-chloro fluoro carbon (HCFC) technology from Hitachi for its products. In the long run, all players have to change technology to use environment friendly refrigerants by the year 2010 in India. The RBI has imposed restrictions on institutional financing to projects using CFC and HCFC technology. Thus, the shift is essential to achieve growth and since Amtrex will need technical support, giving the collaborator a majority stake will give it access to the latest technology.

The air-conditioner industry grew at a faster rate compared to the general industry, growing at 13 per cent in the first half of 1997-98 against 13 per cent in the previous corresponding period. In this segment, growth is believed to have come mainly from room air conditioners.

To target this market, Amtrex has a Rs 100 crore expansion and modernisation project to be implemented in the next few years. The equity expansion will enable it to fund this, especially as the project size is twice Amtrex's current capital employed. The market size of room air conditioners is relatively small at 3.50 lakh units, which offers potential for rapid growth. Sensing this, new players like Godrej-GE and Matsushita have been attracted to this segment and the coming years are likely to see Batliboi, L G Electronics and Samsung enter the fray.

Even within the room air conditioner segment, split air conditioners has a market share of only 15 per cent but is likely to surge in the future. Sensing this, Amtrex launched its new product - Quadra - a split air conditioner with Hitachi technology. If Hitachi does pick up the stake, Amtrex will be in a position to launch value added products and improve its performance.