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Videocon in talks to buy Thai CRT(The Economic Times (India) Via Thomson Dialog NewsEdge) : Driving its global consolidation strategy further, consumer durables heavyweight Videocon Industries is understood to be in discussions to acquire Thailand-based Thai CRT, one of the world's largest television picture-tube makers. Videocon is driving a hard bargain for the acquisition of the Rs 1,700-2,000 crore company, which is in the red on account of unmanageable cost of operations, it is learnt. Thai CRT was established in 1986 with promotional privileges from the Royal Thai government's Board of Investment to establish Thailand's first cathode ray tube business for colour television manufacturers. The shareholders of Thai CRT are the Siam Cement Public Co, Mitsubishi Electric Corp (Japan), Mitsubishi Corp (Japan), Crown Property Bureau, Thai Colour TV manufacturers and member companies in the Federation of Thai Industries' Electrical, Electronics, and Allied Industries Club. The Siam Cement Public Co, with a stake of about 60%, is the largest shareholder in the company. Venugopal Dhoot, chairman and managing director, Videocon, confirmed that talks were on, but declined to give further details. Sources said pricing issues are being ironed out. The acquisition will catapult Videocon into one of the world's top component suppliers. Videocon currently has an installed capacity of 22m CRT units, while Thai CRT is placed at over 7m units. As part of its earlier acquisitions, Videocon took over Thomson's colour picture tube plant and Electrolux's Indian manufacturing facility and the marketing rights for the brand in the Asian market. It is understood to be close to getting the mandate for Daewoo Electronics and is bidding for the US-based digital imaging and electronics major Polaroid. Globally, the total CRT market is around 135m units and over 95% of the total televisions sold in India are CRT-based. Although high-end flat screen televisions, plasma and projection sets are selling in big numbers, industry majors say CRT TVs will continue to have a large consumer base. The penetration is at only 40m sets on a base of 200m households and a large section of consumers are in the lower category - the real consumers. While products like LCDs (liquid crystal display) and plasma addresses the needs of consumers in the top-end of the market, the low-end market is catered to by CRT televisions. Videocon is looking at becoming a low-cost producer to compete with large export hubs such as China and Turkey. Top officials in the company said the group is aiming to be the largest component maker and the only survivor in the CRT business. With its hugely profitable glass shells, oil and gas businesses to easily fund its durables game plan, the company does not have to resort to debt. We are looking at acquiring several plants across the globe. The idea is to acquire assets cheap and turn them around. We are focused on becoming a large player not only in the front end of the business, but also at the back-end, and emerge as the lowest cost producer in the world, an official said. Globally, LG-Philips Display and Samsung are the two largest component makers, followed by Videocon Industries. Videocon has one of the largest manufacturing set-ups across India - 12 facilities against competitors like Samsung and LG, which have one or two facilities. The demand for CRTs is expected to come from emerging markets in Asia, where growth is expected to be high, at least for the next 10-15 years. Videocon officials say that given that LCD and plasma TVs are doubly expensive, the demand for CRT sets will continue to be high. Videocon's edge over competitors is in its backward integration. The company not only makes components like compressors and printed circuit boards (PCBs), but also the shells for the picture tubes. Copyright 2006 The Economic Times of India, Coleman & Co Ltd. Source : Financial Times Information Limited |