The Rs 6,000 crore (Rs 60 billion) Videocon Group has decided to set up a manufacturing base for colour television and air-conditioners at Muscat in Oman. The estimated investment in the facility would be around Rs 100 crore (Rs 1 billion).
"We have zeroed in on Muscat for our new facility in the Middle East. The ground work will start within a month and the production should start by middle of 2004," Anirudh V Dhoot, director of Videocon International Ltd, told Business Standard.
The investment would be made in two tranches, he informed, adding that the production capacity for CTV and AC would be half a million piece each. The products would be sold under Videocon brand itself.
The company was looking at three options for its facility in the Middle East. The other two contenders were Sharjah and Bahrain. Dhoot said a group of company official visited the region earlier to find out a suitable location.
"Muscat is strategically located in the region and we can access markets in Sharjah, Dubai and Abu Dhabi from there. We have scrutinised all three places but Muscat is going to be the choice for us," Dhoot informed, adding that other items such as refrigerator and washing machines would also be manufactured at a later date.
He pointed out that Muscat was offering much better deal in terms of tax and incentive to Videocon.
Moreover, there are not too many white goods manufacturing companies operating out of Muscat in Oman which would make it a captive market for the company as well.
Videocon exports goods worth around Rs 200 crore (Rs 2 billion) and the volume for the Middle East market is close to 15,000 pieces of CTV a month.
The group, which has diversified interests in petroleum, power, entertainment as well as in consumer electronics, has a manufacturing base in China too. The company's Chinese unit manufactures Internet-enabled televisions.
Videocon has recently bought out Italian partner's stake in Necchi Corporation, an Italy-based compressor maker.
The company has the capacity to produce 5 million compressors annually. Necchi supplies compressors to Videocon International's subsidiary Applicomp (India).
The decision to set up another full-fledged unit outside the country comes in the wake of general slowdown in the domestic white goods industry.
There has been little value growth in refrigerator business this year. Experts believe a strong international footprint would cushion the company against downturn in domestic business.
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