The Hindu Business Line : Poor demand for VCRs forces Kalyani Sharp to switch off EOU

THE continuous decline in demand for video cassette recorders (VCRs) and video cassette players (VCPs) in the domestic as well as export markets has forced Kalyani Sharp India Ltd (KSIL), the Rs 200-crore entertainment electronics and consumer durables major with Sharp brand, to initiate steps to discontinue its export-oriented unit (EOU) for the manufacture of VCRs and VCPs.

In a communiqué to shareholders, the KSIL Chairman, Mr B.N. Kalyani, said the company was also phasing out some its audio models. Keeping this in view, the company has also initiated a voluntary retirement scheme for the employees.

Aimed at becoming more competitive, the company is now planning to introduce new models of colour televisions (CTVs), Mr Kalyani said. The company is also planning to trade in LCD TVs and plasma cluster related products such as air purifiers and air conditioners. The company is also evaluating the commercial viability of importing and selling high capacity refrigerators in India on a steady basis.

During the fiscal ended March 31, 2003, the company suffered a major fall in turnover at Rs 201.5 crore from Rs 261.35 crore in the previous fiscal. This was attributed to overall decline in sales of CTV, VCR, audio, LCD projectors and microwave ovens. While the domestic sales were down by 20.4 per cent, the exports declined by 38.2 per cent. Due to sluggish demand worldwide for VCR and stiff competition in pricing, export of VCR declined considerably. There is hardly any market for sale of VCR in the domestic market. In such situation, it was decided to discontinue EOU operations and accordingly, necessary actions were initiated. The company has received permission in principle from the Development Commissioner, SEEPZ, Mumbai, to de-bond the project approved for manufacture of export products. "Your company is now in the process of completing other required formalities and it is expected that the EOU would finally be de-bonded in due course," Mr Kalyani informed shareholders.

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