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Rediff News  All News  » Business » Bajaj Electricals may spin off engg division

Bajaj Electricals may spin off engg division

September 27, 2004 09:46 IST

Bajaj Electronics, which manufactures and markets consumer electronics and luminaries, plans to spin off its engineering and projects business unit into a separate company.

"Considering the difference in the nature of the consumer durables and lighting business and the engineering and projects division and the lack of synergies, the company is now considering spinning it off into a separate company," said Lalit Mehta, senior vice-president, engineering and projects business unit.

The engineering and projects division, which was the smallest division till a few years back, finished last fiscal with a turnover of over Rs 100 crore (Rs 1 billion), contributing nearly 20 per cent of the company's total income.

The division is expected to cross Rs 150 crore (Rs 1.5 billion) of sales turnover this fiscal and emerge the largest of Bajaj Electronics' five business units.

At its current rate of growth, the engineering and projects division is expected to be bigger than all the other business units put together in two to three years. The other business units are Bajaj fans, Bajaj appliances, Bajaj luminaries and Bajaj lighting.

Bajaj Electricals was recently elevated to a tier-A vendor by Power Grid Corporation of India, making it eligible to bid for the Rs 70,000 crore (Rs 700 billion) of investment lined up by the state undertaking for the next 10 years.

The company began exporting high mast poles and transmission lines to Libya, Laos, Dubai and Mauritius this year. Its engineering and projects units have bagged orders worth Rs 150 crore (Rs 1.5 billion) in the first six months of the current fiscal.

Bajaj Electricals underwent a major restructuring two years back when it separated its various lines of business into separate units. The engineering and projects unit then saw an investment of Rs 45 crore (Bajaj Electronics' biggest investment since its inception) for its high mast poles manufacturing facility in Ranjangaon near Pune.

The Ranjangoan plant, which made losses in the last financial year, owing to the interest and depreciation expenses is expected to turnaround this year.

The unit now has three lines of business -- transmission lines, implementation of turnkey projects and high mast and street lighting, of which transmission lines is the biggest turnover contributor.
Parvathy Ullatil in Mumbai