Philips-Videocon Ctv Unit Talks Splutter
Talks between consumer electronic majors Philips India Ltd and Videocon International for buying the former's colour television plant in Salt Lake, West Bengal have run into rough weather.
Top sources close to the deal said Videocon had initially evinced interest but later expressed reservations over buying the plant along with the labour force. Running at very little capacity, the plant employees 360 workers. It can produce 8.75 lakh units per annum.
Though the two sides are still talking, a solution to the problem is yet to be found.
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Philips had decided to dispose of this unit as it was not doing well. The company wanted to shift most of its production from Calcutta and its surrounding areas to Maharashtra.
Early this year, Philips India had appointed Hongkong and Shanghai Banking Corporation (HSBC) to scout for buyers for this plant. Four or five companies were approached: Videocon was one of them. Philips had quoted a price of Rs 20 crore for the deal.
Philips India sources said talks are still on with four to five companies, but refused to discuss specific names. These talks are in different stages of completion. "We are also having different pricing patterns depending on whether the buyer wants to buy the plant with or without the machinery, with or without the labour, etc."
The Salt Lake plant union has not been intimated formally if the company decides to sell the plant without labour. "The sale being public knowledge it was not being done without the knowledge of the workers and union," sources explained.
Videocon International managing director V N Dhoot denied any plans of buying the Salt Lake unit. "There is no deal," he emphasised in Mumbai yesterday.
The plant had been plagued with low capacity utilisation, owing to competition and worsening industrial relations.
In some sense, it also mirrored the company's own performance which plunged from a net profit of Rs 44.2 crore in 1994 to a loss of Rs 14 crore in 1997. The restructuring plan initiated last year has enabled the company to regain some lost ground. Philips incurred extraordinary costs of about Rs 64 crore last fiscal due to the restructuring. Of these Rs 57 crore was for the voluntary retirement scheme (VRS) and Rs 7 crore towards other items.
The skill-to-employee ratio was continuously on the decline for the company. Since 1987, the value added by operations grew only three times, while employee costs rose two-and-a-half times. The result was that value added on each rupee was not resulting into an increased added value.