Voltas and Electrolux had signed a memorandum of understanding (MoU) last month for forging an 80:20 joint venture, where Voltas would be the minority partner.

KPMG Peat Marwick has completed the due diligence exercise and negotiations on the equity structure of the venture is believed to be currently on. The new company will manufacture both the Voltas and Allwyn brands of refrigerators and washing machines.

The hiving off of the white goods division will follow the sale of Voltas' loss-making pesticides unit to Ralchem Pesticides, a wholly-owned Rallis subsidiary, for around Rs 55 crore.

The divestment exercise is part of Voltas' restructuring plan ofstrengthening the core businesses of air-conditioning and engineering, and getting out of the two non-core businesses of agri-chemicals and white goods.The formal transfer of the divisions will take place by the year-end. While the agri-chemicals division will be transferred to Ralchem on August 11, the white goods division is to be transferred in two stages.

Voltas has, however, taken the decision of not transferring its entire white goods division to the joint venture and will retain the OEM manufacturing and commercial refrigeration unit with itself.

Voltas currently has four units: Warora and Buti Bori plants in Nagpur, which manufacture the Voltas brand of refrigerators and washing machines, respectively, and the Nandulur and Hyderabad units of the erstwhile Allwyn division.

While the Warora, Buti Bori and Nandulur units will be transferred to the joint venture, the Hyderabad unit will be retained with the company. Voltas has a one-lakh-units per annum OEM contract with LG Electronics forrefrigerators, and orders for commercial refrigeration from Pepsico, Nestle and Cadbury.

Company sources said that Voltas sees a "huge and growing potential" in the commercial refrigeration sector where it is a "pioneer".

The Warora and Nandulur units have a combined capacity of 3.5 lakh units per annum of refrigerators, while the Buti Bori unit has a capacity of one lakh units of washing machines annually. The Hyderabad unit has an installed capacity of two lakh units of refrigerators.

With the disinvestment, Voltas will also be able trim its huge workforce from around 10,300 at present. It is learnt that around 3,200 labourers are being shifted to Electrolux-Voltas, the joint venture, while around 300 will be transferred to Ralchem Pesticides.

Voltas, in 1993-94, had taken management control of the then BIFR-referred Allwyn for Rs 47 crore but inherited a huge workforce of around 4,900. With the hiving off of the white goods division, the company will be able to shed excess flab. Though thechemicals division is being sold to a group company, Voltas will retain its chemicals trading division. The pesticides unit was closed for a considerable period of time over the last two fiscals for not being able to meet pollution control norms. In recent months, Voltas has also sold its interests in SMS India, a joint venture with Schloemann Siemag AG of Germany. Several of its loss-making subsidiaries, like Voltas Switchgear and Premium Granites, have also been identified for divestment and the process has been initiated.