Sanyo-BPL raises $20 million debt, eyes $10 million more

JV pact allows Sanyo to raise its stake.

Sanyo-BPL Limited has raised a debt of $20 million to take care of the immediate expansion plans of this joint venture. The company has raised this debt from Standard Chartered on corporate guarantees of Sanyo Corporation.

The 50:50 JV between Sanyo and BPL is looking further at raising close to $10 million more in the near future.

The company is understood to be in talks with StanChart and ICICI Bank for this. Sanyo has already loaned the JV $20 million when it took off last year. The agreement has a provision for Sanyo to raise its stake in the JV.

Sanyo-BPL with these monies is going forward in an effort to catch up with other players such as LG, Samsung and Sony. The company on Monday claimed that they have a 4.75 per cent share in the colour television market of around 10 million sets.

This market is expected to grow by around 7 per cent during next year and Sanyo-BPL is working to capture a 10 per cent of this market.

Said Keiji Oshima, president & COO of Sanyo BPL: "We have already achieved 4 per cent marketshare in the CTV segment, expect to reach 7 per cent during the upcoming festival season and are confident of achieving the projected 16 per cent market share over the next three years. We also expect substantial gains in market shares in Karnataka. To achieve this, we will be focussing on tier 2 cities as well."

According to company sources, the JV has achieved sales of around Rs 80 crore, which they see as not so good or bad. "Its just one year since we are on ground and we are looking at a topline of Rs 300 crore in the next couple of years," they added.

Sanyo-BPL is adopting a dual brand strategy wherein Sanyo will focus on high-end televisions while the BPL brand will cater to the mass market. Besides this JV, Sanyo has a wholly owned arm Sanyo India through which a range of other home appliances are being marketed in India.

On the issue of whether Sanyo would want to raise its stake in this joint venture, Oshima said: "The intention is clear that we want to stay as equal partners. If we are planning to invest further, we can always invest in our own arm."

However, senior officials added that eventually Sanyo will have to raise its stake as BPL, given its current financial position, may not be able to bring its share of required future investments.