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Videocon stake in Matsushita set to slide

Our Bureau

CHENNAI, March 6

VIDEOCON'S stake in Matsushita Air-Conditioning India Pvt Ltd is set to come down, with the Foreign Investment Promotion Board approving a proposal by Matsushita Electronic Industrial Co Ltd, Japan, to hike it stake to 90 per cent from the present 70 per cent.

The increase in foreign equity will result in an inflow of Rs 72.5 crore, which, according to officials at Matsushita Air-Conditioning, will be used for "business purposes".

Matsushita Air-Conditioning India is a joint venture between Matsushita Electronic Industrial Co and Videocon with a paid-up capital of Rs 35 crore.

While Matsushita Electronic holds a 70 per cent stake, Videocon, through Dhoot Trading Agencies Ltd, holds the remaining 30 per cent, according to the officials.

The Japanese parent company will hike its stake in the Indian venture through a rights issue, in which Videocon will not subscribe to its entire entitlement.

The plant at the SIPCOT industrial park in Irungattukottai, Sriperumbudur, near Chennai, was set up in 1998-99 with an investment of Rs 60 crore.

It has a capacity to manufacture 75,000 units per annum of one tonne, 1.5 tonne and split air-conditioners..

This year, the company hopes to produce about 55,000 air-conditioners.

According to the officials, there is no proposal right now to increase the plant's capacity as there is excess capacity in the market.

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