BANGALORE, Feb 5: BPL Refrigeration Ltd has put on hold the proposed Rs 200 crore greenfield project on Mumbai-Pune highway to manufacture improved versions of refrigerators. The company is believed to have taken the decision following the dismal consumer durable market scenario, said senior company officials.The company had already acquired about 10 acres of land near Pune for the purpose. The initial investment the company had earmarked in early 1996 was Rs 200 crore. "Due to cost escalation and rupee-dollar disparity, the company's anticipated investment will go up substantially," sources said.
Despite the fact that the company has been contemplating to drop the refrigeration plant at Pune, BPL will not sell the land to a third party. Officials said BPL may use this land for setting up facilities to produce either air conditioners or mixies-new products which the company plans to launch this fiscal.
While officials with BPL Ltd refused to divulge details about the ill-fated venture, it is believedthat BPL Refrigeration Ltd is now looking at increasing the production capacity of its Whitefield facility in Bangalore.During 1996-97, the company had reported a total revenue of Rs 237.67 crore (Rs 212.18 crore), an increase of 12.01 per cent.
Operating profit at Rs 30.18 crore (Rs 27.43 crore) grew by 10.03 per cent. During the period, BPL Refrigeration's market share in the frostfree segment has increased to 52 per cent by volume and 57 per cent by value.According to sources, refrigerator manufacturers all over the country will close the current fiscal on a more positive note with a growth rate of 5 per cent. According to industry estimates, against the predicted growth of minus five for the current fiscal, demand is being pegged between 6 per cent and 8 per cent.
At present, the Asian refrigeration sector is at a take-off stage, though India and China have sluggish growth. India has among the lowest penetration rates for refrigerators in the world (about 12-14 per cent) compared to Japan and US whereit is almost 100 per cent.
Sources said most of the refrigerator sales had to be literally pushed through with dealer incentives, price discounts and exchange melas. As the industry continues to suffer from the hangover of the liquidity crunch and dull capital market conditions, major players like LG and Samsung have also deferred their moves to set up capacities and have plans to utilise manufacturing facilities of some other Indian companies.
Shares buyback likely
BPL Ltd, the flagship company of the Rs 2,600 crore BPL group, is planning to buy-back around 10 per cent of its equity capital in a phased manner.
At present the equity capital of the company stands at Rs 27 crore.
The company's EGM on March 3 will also seek shareholders' consent for a Rs 50 crore redeemable preference issue.
According to officials, the private placement is to bring down the company's high cost debt to the financial institutions. BPL has also joined the National Securities Depositories Ltd (NSDL) todematerialise its shares. This will facilitate the holding and trading of BPL equity shares in electronic form, said sources.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
