Deutsche bails out BPL through Arcil

Bank buys liabilities at huge discount; will pocket neat profit from realty assets in Bangalore

MUMBAI: BPL Ltd, the troubled consumer goods maker, seems to have found a saviour in Deutsche Bank.

The former consumer electronics major has been hobbling with loan liabilities of around Rs1,000 crore — with some estimates pegging it at even Rs1,500 crore.

Deutsche Bank is said to have bought the receivables at a huge discount —- for about Rs350-400 crore from the Asset Reconstruction Company of India Ltd (Arcil).
S Khasnobis, managing director & CEO of Arcil, could not be reached for comment, nor were Deutsche Bank officials.

The German banking giant will take the risk of recovering the monies from BPL. It will do so by jointly developing the huge chunk of real estate at Avalahalli on Old Madras Road in Bangalore, which houses BPL’s electronic components business.

The agreement to transfer the loan liabilities owned by the Arcil to Deutsche Bank has already been inked, sources said.

In the fourth-quarter ended December 31, 2007, BPL posted a loss of Rs29.38 crore on a turnover of Rs21.17 crore. The company has been bleeding for three years now.

In the year to March 31, 2007, the company had posted a loss of Rs30.14 crore as sales plunged three-fourths year-on-year to Rs122.85 crore. In the year to March 31, 2006, the company had posted a loss of around Rs270 crore.

The consumer durables group, at one point in the 90s, was among the top television manufacturers. The Bangalore-headquartered business house created by T P G Nambiar fell on bad times due to white-hot competition from Korean rivals and
from forays into mobile telephony and other segments that it did not have the wherewithal for.

According to sources who dealt with BPL’s chequered relationship with bankers, the company may not use this lifeline to re-enter the consumer goods business which has seen more players from China and South-East Asian countries entering the Indian market.

Further, margins have got thinner with the entry of big retailers in electronic products segment.

What remained with Nambiar was the loans the group borrowed to fund its various diversification activities and also a veritable goldmine in real estate assets.
The efforts to revive the group’s business have been ongoing for some time.

In 2005, Sanyo Electric of Japan and BPL launched an equal-stake joint venture called Sanyo BPL Pvt Ltd.

BPL was to transfer its colour television business to the joint venture, including manufacturing, sales, service, marketing, and distribution infrastructure.

Sanyo, on its part, would bring in its cutting-edge technological knowhow, the benefit of established R&D.

j_satish@dnaindia.net