Srf To Hive Off Lenses Division

SRF has decided to hive off its ophthalmic lenses division into a separate joint venture with French company Essilor and Australian manufacturer Sola.

Essilor and Sola will each pick up a 45 per cent equity stake in the new firm, to be called Indian Ophthalmic Lenses Manufacturing. SRF will pick up the remaining 10 per cent.

The venture, with an equity capital base of Rs 32.5 crore, will take over SRFs existing manufacturing unit in Bangalore and produce plastic lenses for the retail market under three brand names - Essilor, Sola, and the existing SRF brand Acculite.

However, marketing of the brands will be done through two separate firms. An Essilor-SRF joint venture to market Essilor and Acculite brands, and a wholly owned Sola subsidiary to market Sola products are being proposed.

Essilor and SRF are setting up a separate venture called Essilor SRF Optics Pvt Ltd, with an equity capital base of Rs 5 crore. Essilor will hold 74 per cent shareholding with the balance 26 per cent being held by SRF.

Sola too proposes to set up a 100 per cent subsidiary - Sola Optical India Pvt Ltd - with an equity base of about Rs 2 crore.

SRF sources disclosed that the company is yet to work out a detailed schedule to set up the two joint ventures which are slated to be operational by the end of 1998.

These proposals were approved by the FIPB at its last meeting, and are currently awaiting clearance by the new industry minister.

The proposals involved a royalty payout at the rate of 3.5 per cent of the products sold under the Essilor and Sola names.

The FIPB, which waived the dividend balancing condition for the manufacturing JV on the grounds that it will operate the Bangalore EOU facility of SRF, has directed that the company will have to fulfil dividend balancing criteria if the unit debonds and operates as a domestic-tariff-area unit at a later stage.

SRF, which had set up its ophthalmic lenses business as a separate division within SRF Ltd in 1995, set up a greenfield manufacturing site in Bangalore which began commercial operations in 1996.

The company launched its Acculite brand in the market in 1996, but later identified the business as a non-core division and has since then scouted for a foreign equity partner who would give them access to international brand names and technology, as well as additional funds.