Voltas In Talks With Lg For Joint Venture

Tata group company Voltas is negotiating with South Korean major LG Electronics to hive off a part of its white goods business into a joint venture.

Industry sources said that Voltas is likely to hold a minority stake in the venture. The details of the equity pattern is currently being worked out, and the company is awaiting for financial institutional approval for the proposed hive off.

The approvals are expected to be in place in a couple of months, sources said.

The company already has a contract manufacturing agreement with LG and Swedish white goods major Electrolux.

When contacted, company officials refused to comment on the issue. However, an official communication from the company states that, "While losses in the white goods division of the company have been cut down substantially, the board has decided to transfer a part of the white goods business to a joint venture company with a multinational corporation subject to obtaining the requisite approvals, including that of the financial institutions."

The bleeding white goods business was the principal reason for Voltas plunging into the red with a first ever loss of Rs 16.8 crore in 1996-97. The company has however pared losses to

Rs 9.5 crore in 1997-98.

The exit from the white goods business is a part of the Voltas move to restructure itself. The restructuring exercise is the brainchild of N D Khurody who took over as managing director from V H Munshi in early, 1997.

The main reason for Voltas poor performance in the white goods business was the high cost of manufacturing. This coupled with competition from multinationals resulted in Voltas plunging into the red.