Electrolux Seeks To Up Kelvinator Stake To 78%

AB Electrolux, the Swedish appliances major, expects to have a shareholding between 76-78 per cent in Electrolux Kelvinator Ltd (EKL) after its two other subsidiaries -- Electrolux India Ltd and Intron Ltd -- are merged into EKL.

The company has filed an application with the secretariat of industrial assistance (SIA) in the commerce and industry ministry seeking government nod for increasing its holding in EKL to 78 per cent, following requisite clearances from the High Court and other regulatory bodies. Electrolux currently holds a 56 per cent stake in EKL.

Though AB Electrolux has government permission to hold up to 74 per cent in the joint venture (EKL), its shareholding has never crossed the 56 per cent mark.

 

Even a rights issue which could have taken Electrolux's holding beyond 90 per cent (if the remaining shareholders had not subscribed to their entitlement) had been subscribed to by the resident partners thereby maintaining the existing shareholding pattern.

Electrolux India chief executive Ram Ramsunder told Business Standard that an application was filed with the foreign investment promotion board (FIPB).

He said the proposal was filed only to keep all regulatory approvals in place before the merger receives final clearance from the High Court. The HC hearing is scheduled for August 21.

Ramsunder said that after considering the valuation of the three companies and the swap ratio proposed, it was found that post-merger, AB Electrolux's holding in the new company should be between 76-78 per cent.

The FIPB is expected to consider the proposal at its meeting on Thursday, government sources said.

The administrative ministry has already given the green signal to the scheme, it was learnt.

While AB Electrolux has around 56 per cent shareholding in EKL, Harish Kumar of Maharaja Appliances holds 26 per cent and the remaining is widely held.

EKL is listed on the Bombay Stock Exchange. The joint venture manufactures refrigerators under the Electrolux, Kelvinator and Allwyn brandnames at its Shahjahanpur facility.

Electrolux India Ltd (EIL), on the other hand, was set up as a joint venture with the Tata group-promoted Voltas Ltd for manufacturing white goods.

Though originally AB Electrolux was expected to pick up 80 per cent stake (the balance being held by Voltas), the Sweden-headquartered MNC finally picked up 26 per cent.

Electrolux picked up the balance 74 per cent, and in the process acquired Voltas' Allwyn brand and its two refrigerator manufacturing units in Dadra and Hyderabad.

Subsequently, Voltas sold its stake to Electrolux and EIL became a wholly owned subsidiary of AB Electrolux.

In Intron Ltd, AB Electrolux holds 74 per cent stake. The company manufactures washing machines under the Electrolux brandname.