Havells and Voltas in race for Videocon's Kenstar brand

Videocon is selling the Kenstar brand to reduce its debt that has gone up to Rs 43,000 crore

A host of Indian consumer electronics companies like Havellsand Voltas, besides private equity companies, are in a race to buy out Videocon Industries’ Kenstar brand to increase their market share. Videocon is selling Kenstar to reduce its debt, at Rs 43,000 crore as of March this year.

According to a banker close to the development, most of the companies have bid for the brand which is a household name in air coolers, microwaves and air conditioners. The banker did not disclose the names of the private equity firms that are in the race but said Credit Suisse is handling the sale.

In February this year, Havells had taken over the consumer electronic business of Lloyds Electric for an enterprise valuation of Rs 1,600 crore. Similarly, debt hit Crompton Greaves had sold off its consumer electronics business for Rs 2,000 crore to private equity firms, Advent and Temsek in April 2015. “The debt of traditional companies is leading to a consolidation in the consumer electronics sector,” said the source. “One can expect more such sales from the old companies,” said a banker. 

The Crompton transaction turned out to be a good deal for the private equity firms as the current market valuation of the listed company is Rs 13,484 crore as compared to Rs 5,800 crore valuation at the time of the deal in April 2015.

A banker said Kenstar is a valuable brand considering its high market share in various segments and a vast dealer network spread across India. Videocon is selling the brand as it was hit by spectrum and license cancellation by the Supreoup Court in 2012 that hit the group’s finances. Apart from Kenstar, the Videocon group has already completed the sale of its oil block in Mozambique for Rs 16,000 crore. The group also sold its Direct-to-home TV business to Dish TV in an all-stock merger. The group is also looking to sell the stake in its general insurance business and is in talks with several players.