Videocon okays merger of EKL Appliances

Videocon Industries today approved the scheme of amalgamation of EKL Appliances (formerly Electrolux Kelvinator or EKL) with itself.

The scheme proposed share exchange ratio of 1: 27,619, which means shareholders of EKL will get one Videocon share for every 27,619 shares they hold.

The proposed merger of EKL with Videocon follows the latter's acquisition of the entire 91.25 per cent stake of Swedish major AB Electrolux in its Indian subsidiary Electrolux Kelvinator (EKL) last year.

The buyout involved the sale and marketing rights of all the three brands "" Kelvinator, Allwyn and Electrolux. AB Electrolux, on the other hand, received 5 per cent stake in Videocon Industries for $94 million (Rs 410 crore).

At the time of the acquisition, Videocon had said these 'relationships' would lead to an annual trade of over Rs 6,000 crore in the next three-five years.

Electrolux broke even in January this year with its revenue for the month exceeding Rs 35 crore and net profit at Rs 4.2 crore. The company incurred a net loss of Rs 15 crore for the July-December period.

It attributed this to increased focus on other product categories like air-conditioners and washing machines, resizing workforce, production restructuring and retail expansion.

EKL earns 55-58 per cent from the sales of refrigerator, down from 75 per cent a year ago, with air-conditioners contributing 22-25 per cent and the rest contributed by washing machines and microwave ovens.