The Bangalore-based VXL Instruments plans to divest its majority stake in its UK-based subsidiary, VXL Instruments (UK), from the existing 60 per cent to 49 per cent.
The company, involved in the manufacture and vending of computer terminals, monitors, servers and LAN (local area network) products, both in the domestic and export market, plans to approach the Reserve Bank of India (RBI) for its guidelines for seceding the majority stake in the subsidiary.
We are considering of bringing down our stake by 11 per cent to 49 per cent from our existing stake of 60 per cent, A V Kasargod, chairman and managing director, VXL Instruments, told Business Standard.
Also Read
Since the proposed move would leave the UK arm no more a subsidiary of VXL, the company needed to seek RBI guidelines before proceeding for arriving at the consideration price at which the UK shares are to be disposed off, company sources said.
VXL now holds a majority stake of 60 per cent in the VXL Instruments Ltd ((UK), as against its two London partners, D S Rao and S R Savoor, who hold 40 per cent together. VXL Instruments, a company incorporated in India, holds 108,000 ordinary shares representing 60 per cent of the issued share capital of the UK subsidiary.
During 1994-95, the company increased its issued share capital from 30,000 to 180,000 by issuing 150,000 ordinary 1 pound shares at par.
Its principal activity is that of importers and whole-salers of computer peripherals.
The UK subsidiary of VXL has reportedly made a loss for the year of 1995-96 of 171,160 pounds compared with 232,956 during the previous year.
However, Kasargod said the total accumulated loss of =======400,000 pounds incurred by the UK arm has been mainly on for its marketing and promotional efforts across the Europe. This could not be termed as losses, he said.
VIL (UK)s total business constitutes of only 2 per cent of our annual turnover, and whatever losses it could have made had been only nominal to the whole operation, Kasargod said.
VXL set up its UK subsidiary mainly as a window on its products in the European market.
On measures to bring down the cost of the UK arms operation, Kasargod said VIL (UK) was considering disposing off its rented storage facilities and instead, take space at the Rotterdom-based India Marketing Agency Ltd, for distribution throughout the Europe.
The company, which has made a turnover of Rs 45 crore for the year 1995-96, has set up a sales target of Rs 65 crore during the current financial year. It also expects to double its export from Rs 16 crore made during the last year in the current financial year.
Last year, VXL has set up a 100 per cent export-oriented unit in Bangalore. The company exported CRT terminals and sub-assemblies to the US and the UK markets and also made a headway in the Japanese market by exporting its monitors to Japan. It currently exports 80 per cent of its products to the US.