M P Birla Group’s Universal Cables has signed a joint venture agreement with Japan’s Furukawa Electric for manufacturing optical fibres in Goa. Mr D.R. Bansal, CEO of Universal Cables, told Business Line that the joint venture was setting up a new plant at Universal’s existing manufacturing facility in Goa at Rs 50 crore The unlisted 55:45 joint venture would be an associate company of Universal Cables — which would contribute to 45 per cent of the paid up equity; an additional 10 per cent would be taken over other group companies and Furukawa would pick up 45 per cent, Mr Bansal added. The arrangement According to the arrangement, the new plant would have a significant portion of the existing 1.5-million-optic-fibre-km-a-year facility. Mr Bansal explained that according to a valuation exercise, the 1-million-fibre-km/year production facility, which was being shifted to the joint venture, was around Rs 14 crore. This would form the contribution from Universal Cables to the paid up equity of the joint venture. The balance 0.5-million fibre km would remain with the Universal Cables. But, this would be upgraded with the Furukawa technology — particularly for producing fibre with greater diameter and length. The joint venture company, according to the agreement, will always have a board Chairman nominated by Universal Cables. Furukawa and MP Birla group will have additional berths on the board. Commercial production It is expected that the new facility would start commercial production by December this year. Mr Bansal said though there was no formal buyback arrangement with Furukawa, it is understood that production worth around 1 million fibre km would be meant for exports in the international markets exclusively by Furukawa in 2010-11. This joint venture would be designed to provide a low-cost manufacturing base outside Japan.
Source: The Hindu BusinesslineUniversal Cables, Japan’s Furukawa in joint venture for optical fibres
Industry: Other 2016-04-03