North Block clears BPL, Sanyo JV

The finance ministry has cleared BPL's 50:50 joint venture with the $22 billion Japanese electronics major Sanyo to manufacture, market and export colour televisions (CTVs).

Sanyo's 50 per cent equity in the new firm, BPL Multimedia, would amount to nearly Rs 45 crore and the Japanese firm also plans to infuse an additional Rs 200 crore in the new company through external corporate borrowings, which would be used to retire some of BPL's high cost debt.

Sanyo will also enter into a technical collaboration with BPL Multimedia and claim lumpsum payment not exceeding $2 million and annual running royalty of up to 5 per cent of total domestic sales and 8 per cent of export sales.

Ajit Nambiar, chairman and managing director, confirmed the North Block approval. The new entity is likely to become operational at the start of fiscal 2005-06.

The approval also allows BPL Multimedia to foray into other appliances categories at a later date if both the partners agreed.

The joint venture was made possible after BPL Ltd's Rs 1,400 crore corporate debt restructuring plan was approved by its lenders. Some of its biggest lenders include ICICI Bank, Canara Bank and UTI Bank.

According to company sources, the new management team will be finalised soon and Nambiar is likely to be the CEO of the new entity along with a COO from Sanyo.

"We are confident of making a strong comeback this time. We have full commitment from Sanyo," Nambiar said. In the CTVs and appliances, BPL lost its leadership in the mid-1990s under the onslaught from Korean companies such as LG and Samsung.