The Hindu Business Line : Sanyo may pump in $40 m into BPL

JAPAN'S Sanyo Electric Co Ltd is expected to pump in $40 million into BPL Ltd, the beleaguered domestic consumer durables major. This will mark the first phase of Sanyo's investment into the Indian major, which is in the final stages of a rather prolonged corporate debt restructuring exercise, informed sources said.

Mr Ajit Nambiar, Chairman and Managing Director of BPL Ltd, said the deal making with Sanyo was on track but nothing has been finalised yet.

"It is a long climb up," he added.

BPL's proposal for an initial capital infusion of roughly $40 million is before the Sanyo board.

It is not yet clear whether Sanyo would directly invest in the first round or a financial institution backed by Sanyo guarantee would extend a loan. Sources said the impending capital infusion would not result in Sanyo picking up equity in BPL right away.

Meanwhile, BPL Ltd stock zoomed over 12 per cent on BSE on Monday to close at Rs 58.30 after an intra-day high of Rs 61.25. The counter saw trading volume in excess of 18 lakh shares.

Analysts said the market was expecting news regarding significant capital infusion into the company shortly.

BPL Ltd, the flagship of the TPG Nambiar controlled BPL group, is laden with debt in excess of Rs 1,200 crore and is finalising a debt recast exercise with ICICI Bank, Amex and a host of other domestic financial institutions.

It must be mentioned that post-restructuring the company is targeting to bring down the total debt to Rs 700 crore mark within three years.

The capital infusion from Sanyo is part of a three-legged restructuring exercise, which would also see the group exiting its non-core businesses, including power and telecom, in a phased manner. BPL also expects to raise cash through extra commercial borrowing route from a clutch of European financial institutions.

BPL is charting ways to bounce back in its mainstay colour television (CTV) business with an ambitious advertising and marketing budget of roughly Rs 60 crore for the current calendar year.

The company, which once topped the pecking order of the CTV brands in the country, reckons that comeback would not be easy.

However, the company claimed the brand has enough latent equity to bite for 10 to 12 per cent share of the market in the next two years.

BPL is also pinning hopes on its new business of mobile handsets and would marshal significant resources behind it.

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