Videocon Opts Out Of Elcina

The Videocon group, one of the leading consumer electronics players in the country, has opted out of the Electronic Components Manufacturers Association (Elcina).

The Dhoot-promoted group withdrew its membership from the association in the wake of the merger of group company Videocon Narmada Electronics Ltd, which manufactured colour glass shells, with the flagship Videocon International Ltd.

The merger, which was approved last year, but took effect retrospectively from March 31, 1996, resulted in Videocon ceasing to be in the component manufacturing industry segment through a separate legal entity.

The senior management of Videocon International, which will now undertake the groups glass shell and television manufacturing operations, took the decision on the grounds that, since the company was already a member of the Consumer Electronics and Television Manufacturers Association (Cetma), it could not simultaneously participate in Elcina.

 

Videocons withdrawal from Elcina could deal a severe blow to the associations demand for a more protectionist approach to the industry by the government.

The electronic component industry in the country has been one of the worst hit during the countrys economic reforms which lowered import duties and barriers to foreign entry, thus making domestic manufacturers vulnerable to competition from cheaper imports. This is reflected in the membership figures of Elcina which represents about 85 per cent of the Rs 3500-crore domestic electronics component industry.

The association has seen its membership drop from 330 in 1995 to 285 by the end of 1997, primarily because of the slow death of many small manufacturers of electronic components, sources revealed.

Videocon International recently signed a seven-year technical agreement with NEG of Japan for expanding its newly-acquired glass shell facilities.

, with NEG retaining the option to pick up equity in the project.

The merger of Videocon Narmada Electronics with Videocon International was approved last year with a share swap ratio of 1:12 one share of Videocon International for every 12 shares of Videocon Narmada. The share swap ratio was worked out by I-Sec, the merchant banking arm of the Industrial Credit and Investment Corporation of India (ICICI).