Dhoot: Under one roof

New Delhi, July 7: The Rs-6000-crore Videocon group today set a 5:1 swap ratio for merging Videocon International, its consumer electronics arm, with Videocon Industries, the oil production entity, as part of an elaborate group restructuring plan.

Simultaneously, it has scooped up the loss-making Indian arm of AB Electrolux in a complex deal that will give the Swedish appliance maker a 5 per cent stake in Videocon Industries.

Under the stock-for-asset deal with Electrolux, the Videocon group will acquire the entire 91.85 per cent stake of AB Electrolux in its Indian subsidiary, Electrolux Kelvinator Limited (EKL).

The deal also allows Videocon the right to market three brands ? Kelvinator, Allwyn and Electrolux in India.

In turn, AB Electrolux will invest about Rs 410 crore in the global depositary receipts (GDRs) of Videocon Industries, which will eventually take its holding in Videocon to 5 per cent.

With an employee strength of 1,200, EKL makes refrigerators and washing machines at its production facilities in Shahjahanpur (Rajasthan), Warora and Butibori (Maharashtra). Videocon will take over these manufacturing plants.

Videocon will also get an opportunity to tap the global market as it will supply refrigerators and washing machines to Electrolux over the next five years. It will also produce components for Electrolux's global operations.

The company expects a trade turnover of over Rs 6,000 crore every year over the next three to five years.

Videocon will invest Rs 300 crore from its internal accruals in the next three years to upgrade the manufacturing facilities. The company will also spend Rs 100 crore on advertisement and sales promotion of the Electrolux brand in India in the next five years.

The Electrolux deal mirrors the recent pact under which Videocon bought out the colour picture tube manufacturing plants of Thomson SA of France, including units in China, Poland and Mexico, for 240 million euro. In return, the group offered Thomson a 14 per cent stake in Videcon Industries for Rs 1,280 crore.

Videocon had appointed Development Bank of Singapore (DBS) and ICICI Bank as advisers on the merger.

Based on their suggestions, the Videocon group has decided to restructure all its businesses into one corporate entity called Videocon Industries Limited.

“This single entity post- merger will have under its umbrella the entire vertically integrated multi-brand domestic consumer durables business along with the international business acquired from Thomson SA. It will also look after international oil and gas business interests,” said Videocon.

Thomson will invest $270 million in Videocon GDRs and the transaction is expected to be completed by September this year.

Electrolux said it will continue its presence in India and was expecting to source goods and services to the tune of $300 million per year by 2007.