At a press conference jointly addressed by the LG Electronics managing director KR Kim and Voltas managing director ND Khurody, the two companies announced that LG Electronics India will source approximately 6 lakh units of direct cool refrigerators from Voltas over a period of three years with effect from January 1, 2000.

The fresh deal, estimated at Rs 550 crore, will involve Voltas dedicating almost 80 per cent of its installed capacity to manufacture non-commercial refrigerators at the Sanathnagar facility, near Hyderabad, for execution of the contract with LG Electronics.

The Sanathnagar facility has been used by Voltas for private label or contract manufacturing of domestic and commercial refrigerators for a number of years now. This facility was retained by the Tata group company when it transfered anumber of facilities to a joint venture set up with Electrolux last year for refrigerators and washing machines business.

Voltas has been manufacturing refrigerators for LG Electronics for nearly two years as per designs and specifications provided by the Korean company. Under the contract that expires in December 1999, Voltas has been supplying 90,000 refrigerators per annum to LG Electronics. The new deal is renewable before December 2002.

On the issue of Voltas taking up manufacturing of frost free refrigerators, LG Electronics India vice president sales and marketing Rajeev Karwal said discussions between the two companies were underway. "Nothing concrete has been arrived at yet."

Voltas managing director Khurody, however, stated that the company would be happier manufacturing direct cool refrigerators than a mix of direct cools and frost free machines. "We will not manufacture frost free refrigerators unless LG Electronics force us to do so," said Khurody. He added that company would achieve higherlevels of productivity by restricting itself to the direct cools.

Khurody further stated that the Voltas was planning to source the compressors for LG Refrigerators from the South Korean company. At present, Voltas sources the compressors from Electrolux. "We will buy the compressors from whichever company that offers us best price," Khurody stated.

Meanwhile, LG Electronics announced that it was expanding its product offerings in the home appliances segment. In the refrigerator segment, it has introduced 280 litre frost free model to retail below Rs 20,000, new models of direct cool refrigerators with new interior graphic design, a coloured microwave oven, new front loading washing machines, and cassette and duct type airconditioner.