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Bengal govt supports sale of Philips Calcutta plant to Videocon arm

Electronics major Philips has claimed that the West Bengal state government is supportive of the company's decision to sell its Calcutta-based Salt Lake factory and clarified that all the 359 employees will continue to work with same benefits in the buyer company.

Quoting a top official of the West Bengal government, Managing Director K Ramachandran said the state government will do everything in its control to ensure that the deal goes smoothly.

He said that the Philips has entered into a memorandum of understanding and later a sale agreement with a Videocon nominee company -- Kitchen Appliances India Limited -- and arrived at a sale price of Rs 90 million, in spite of investing a total of around Rs 700 million in the Salt Lake factory.

Ramachandran said that Philips stands by its three main considerations -- continued employability of all the 359 employees in the Salt Lake factory, the sold factory will continue to be a manufacturing centre thereby continuing to contribute to the economy of West Bengal, and a fair value for the company and its shareholders which would minimise the cost of the company.

However, in this process, the company faced some resistance by a section of union, namely, the Philips Employees Union-Bombay, at the extraordinary general meeting held at Calcutta, reports say.

However, the company is facing no problems from the Centre for Indian Trade Union, a sister organisation of the Communist Party of India-Marxist.

Ramachandran said that the probable buyer, Kitchen Appliances, has grown to a Rs 2 billion company in the last three years and has a paid-up capital of around Rs 250 million. Apart from the Videocon brand, Kitchen Appliances will also manufacture products under the Sansui brand name.

The sale value of Rs 90 million has been arrived taking into consideration security of employment of all the employees inclusive of the liabilities of gratuity and leave encashment, which was an important objective.

Philips has entered into a legally binding sale agreement with Videocon. The agreement is subject to approvals and permissions as are necessary. Should this agreement not get through for any reason whatsoever, Philips will consider the offer along with offers from other parties at that point in time, he said.

He said with regard to the sale, the company had detailed discussion with the financial institutions to explain their position. As a borrower, Philips has taken Rs 300 million from the GIC, LIC and UTI, while as shareholders, these institutions hold 20.93 per cent shares of the company.

UNI

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West Bengal