Tata company Voltas eyes Videocon's home appliances brand Kenstar

MUMBAI: Mumbai: Engineering services provider and airconditioner maker Voltas, a part of the Tata Group, is evaluating a bid for Kenstar, the home appliances brand owned by the debt-laden Videocon Group. If the deal materialises, it will be the first acquisition under the new leadership at Bombay House, the storied HQ of the $103-billion Tata conglomerate.

Voltas is currently engaged with the sale process after a detailed presentation was made to the company leadership by the dealmakers representing the sellers, people with direct knowledge of the matter said. But Voltas has not taken a decision on submitting a formal bid, sources added. If Voltas progresses with its interest in Kenstar, it would help the more than sixdecade-old company to boost its retail business in aircoolers, besides expanding the home appliances portfolio.

The company is likely to vie with Crompton Greaves Consumer, now owned by private equity investor Advent International, and others for Kenstar. Swiss bank Credit Suisse is advising Kenstar and Videocon on exploring strategic options including a sale.

Creditors are pushing the Dhoot family-owned Videocon Group for the sale of some of its assets, including Kenstar. The diversified enterprise has a debt of nearly Rs 35,000 crore on its books. Saurabh Dhoot, director, Videocon Group, said that Credit Suisse will assist the enterprise's consumer durable business with several restructuring options. He, however, denied the sale of Kenstar. Voltas MD Sanjay Johri also declined to comment on the story . The financial details and how a potential sale of Kenstar will be structured could not be ascertained immediately.

Kenstar has a significant presence in aircoolers, which is a big category in the country's dry heat markets. Symphony , Kenstar and Bajaj are leaders in the organised aircooling market, reporting a compounded annual growth rate of around 15%.

Voltas entered the air coolers segment two years ago.Only 12% of the estimated 250 million households have either airconditioners (ACs) or coolers. Rising temperatures and disposable incomes are expected to drive sales of premium coolers, which are considerably cheaper than ACs.

The airconditioning business, which was once a drag on Voltas, has turned around.For the last several years, Voltas has a leadership position in room ACs with a market share of 22%. Voltas has completely grown its airconditioning business -the second biggest revenue generating unit after electro-mechanical projects and services -organically.