BPL sees more strategic divestment

BPL Ltd, after hiving off its CTV business into a 50:50 JV with Sanyo and selling its dry cell business to Eveready, is lining up more strategic divestments, which are likely to cover its medical electronics and engineering plastics business.

P V K Sundaram, director, BPL said, "Medical electronics and engineering plastics are technology intensive businesses. We are looking at roping in strategic partners for these businesses in the near future." BPL Ltd, after the recent deals now has a business worth Rs 250 crore (Rs 2.5 billion) in its portfolio.

During the early part of this year, BPL had commissioned PricewaterhouseCoopers to do a strategic exercise for its various businesses. Based on the conclusions, BPL will now focus on the core businesses, which have been identified as entertainment, electronics, medical electronics, engineering plastics and tooling, the last primarily for the automotive and consumer electronics industries.

Having now obtained the approval from the Kerala High Court for its financial restructuring scheme and the launch of the 50:50 joint venture with Sanyo for the

CTV business, BPL is all set to focus and strategise on the above core businesses. Commenting on the move to divest dry cell business for Rs 67 crore (Rs 670 million) to Eveready, Ajit Nambiar, CMD, BPL said, "Although we were the  latest entrant in the domestic dry cell business, we have established the BPL brand  with a 10 per cent market share in the business."

"This 10 per cent marketshare has been achieved by only addressing the metal jacket segment of the dry cell business.  We have not addressed the paper jacket segment, which still constitutes 50 per cent of the industry," he added.

He added that when BPL entered this business they wanted their brand to be associated only with the premium dry battery segment and not the paper jacket categories, which caters to price sensitive markets.

"We believe that to be among the top three players in the domestic industry, we will have had to enter the paper jacket segment, which we didn't want in the first place.

Hence we have decided to exit this business. This divestment is part of the ongoing programme of restructuring of our business portfolio to focus on our core businesses and create value for all our stakeholders," Nambiar reasoned.

He added that insofar as the alkaline battery business of the company is concerned, BPL is currently working on plans for strategic tie-ups to address the global alkaline battery markets and considerable progress is being made in that direction.

BPL Soft Energy has a topline of close to Rs 100 crore (Rs 1 billion) and according to a statement from Eveready, the consideration for the acquisition is Rs 45 crore (Rs 450 million) and assumption of net liabilities, including term loans and bank borrowings, for a sum not exceeding Rs 22 crore (Rs  220 million).

The enterprise valuation for the business is expected to be around Rs 82 crore (Rs 820 million), subject to due diligence proposed to be carried out. The deal is expected to be completed by October 28, 2005.

BPL Soft Energy Systems, a subsidiary of BPL Ltd, manufactures dry cell batteries and flashlights, and has a capacity of 240 million pieces of dry cell batteries per annum.

Eveready will have rights to use the BPL brand for the next 30 months after the deal is finalised and subsequent to that period, the brand will revert back to BPL.

BPL has added that it plans to leverage its brand, distribution and manufacturing strengths to introduce products in the wireless space such as mobile handsets, and  portable telecommunication and wireless products within the next few months.