Shaw Wallace Mulls Recast Options For Electronics Arm

The M R Chhabria-controlled Shaw Wallace and Company (SWC) is weighing several options to restructure its subsidiary Shaw Wallace Electronics Ltd, including selling its stake to SWC parent Jumbo and converting the company's unit into a contract manufacturer.

The electronics subsidiary is facing severe liquidity crunch and working capital constraints owing to the troubles which the parent SWC has also been going through. Shaw Wallace Electronics was acquired from Mulchandanis in 1994 who held over 51 per cent stake in it. The company had been manufacturing Aiwa range of audio products.

Another possibility being evaluated is to convert the Ahmedabad-based plant of the company as a computer hardware manufacturing facility, rather than a dedicated consumer electronics manufacturing base which it currently is. "These options are under detailed considerations, but the company has taken no firm decision yet," a SWC spokesperson told Business Standard yesterday.

 

In the face of changed business environment, liquor major SWC has decided to focus on core competencies and therefore disinvest in businesses which do not make a synergistic fit with the core business. The options for the electronics subsidiary are therefore being considered against the background of restructuring SWC's own businesses.

Besides, the option of selling the stake in Jumbo will make more sense since Jumbo, which is SWC's parent, has considerable strength and expertise in the electronics business.

"Viewed in that context, this acquisition would make sense just as was the case with a string of distillery and brewery acquisitions intended to strengthen the core business," sources explained.

According to the company's annual report for the year-ended June 30, 1995, the company had commenced manufacturing the Aiwa range of audio products at its factory, which was totally refurbished to suit the state-of-the-art audio product requirements.