The demerger of Crompton Greaves into three separate companies will take 18 months and the exercise is being undertaken without the help of consultants, according to K K Nohria, the outgoing managing director of Crompton Greaves.
Nohria, who will continue as chairman, said Crompton's units are being demerged in order to develop their core strengths in 3 areas of businesses including power systems and industrial systems, consumer products and telecom and networking.
"The power systems and industrial systems (PSIS) will tap the business opportunities arising out of the power projects. The PSIS unit contributes a major part of revenue to the extent of 70 per cent of our total turnover," Nohria said.
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The PSIS unit has been facing stagnant business demand for its products as several power projects announced by the government and the private sector are either moving very slowly or are being put on hold.
The consumer products unit is into manufacturing of fans and lights market.
The telecom and networking unit manufactures telephones, telephone exchanges, local area networks, backbone and other networking systems.
Around 15 per cent of the company's turnover comes from exports and now the company plans to give a major thrust for exports, particularly in areas of businesses where it is finding weak demand in the domestic market.
In the current year, Nohria said that Crompton Greaves plans to undertake Rs 60 crore capital investment for upgrading and modernising its manufacturing facilities.
Meanwhile, Nohria indicated that his successor will be from within the company and his suggestion on the new successor is expected to be approved by the board when it meets on May 2.
Meanwhile, CoreEl Labs, a wholly owned subsidiary of the US-based CoreEl Microsystems where Crompton Greaves group has a substantial stake has
decided to invest $8 million by this year end for product development and to make silicon chip designs that will be sold to overseas IT firms.
CoreEl Labs has targeted to corner a substantial part of the $1 billion per annum market for silicon products that are used for emerging optical networks over which runs the Internet.
"By the year 2002, we will be able to earn revenues of up to $50 million from our silicon products," Nohria claimed.
"We have a high speed for designing and delivery of the silicon chips ahead of the competition. Our delivery period will be 3 months," Yu Hao Lin, president of CoreEl Microsystems, said while admitting that they were yet to make its first breakthrough in the highly competitive and hi-tech silicon design market.