Swc Withdraws Name From Arm

Shaw Wallace Electronics Ltd, the consumer electronics subsidiary of Manu Chhabria's Shaw Wallace and Co (SWC), is being referred to the Board for Industrial and Financial Reconstruction (BIFR), as more than 50 per cent of its net worth has been eroded.

Shaw Wallace has also decided not to lend its name to the company any longer, as part of its focus on the core liquor and beer businesses.

The company was supposed to herald Chhabria's entry into the consumer electronics sector in a big way. The name of the company would now be Gandhinagar Electronics Ltd, as the factory is located at Gandhinagar. SWC's decision not to lend its name to the electronics company is seen as a move to associate the `Shaw Wallace' name to only the liquor businesses.

However, SWC is continuing efforts to restructure the ailing company and is weighing the option of turning the Gandhinagar factory into a contract manufacturer or a manufacturer of computer hardware rather than a dedicated consumer electronics manufacturing base. Another option is of selling the stake to SWC parent Jumbo Elect-ronics.

Shaw Wal-lace had acquired Shaw Wallace Electronics from the Mulchand-anis, who held an over-51 per cent stake in 1994. Formerly known as Cauvery Elect-ronics, the acquisition had made sense at the time owing to the core strengths of Jumbo, Shaw Wallace's overseas parent, and also since SWC was planning major forays into upcoming businesses then. "Viewed in that context, the acqu-isition made se-nse just as was the case with a string of distillery and brewery acquisitions intended to strengthen the core business,'' sources said.

During 1995-96, Shaw Wallace Electronics posted a loss of Rs 6.5 crore, against a profit of Rs 7.06 lakh in the previous fiscal. The company said that, due to severe working capital constraints, the company could not produce any goods for about eight months at its Gandhinagar factory.

How-ever, the position has improved marginally for company which commenced trading activity in the fields of lighting and luminaries.

As on June 30, 1996, the company had a net worth (capital together with reserves and surplus) of Rs 10.92 crore. The loan funds (secured and unsecured loans) totalled Rs 30.65 crore.

The company has also said that, with increasing competition in the electronics industry, the only way to survive was to increase volumes of production and/or sales, but this was not possible for Shaw Wallace Electronics which was facing an acute shortage of working capital.

The company had earlier commenced manufacturing the Aiwa range of audio products, which was totally refurbished to suit the state-of-the-art audio product requirements. The products had also been approved by Aiwa Company Ltd, Japan.l Shaw Wallace Electronics referred to BIFR

SWC withdraws name; company to be called Gandhinagar Electronics

Moves afoot to restructure company

No production for 8 months in 1995-96 due to severe cash crunch