LG Electronics India is planning to source its refrigerator requirements from Voltas on an original equipment manufacturing basis till 2007-2008. The immediate requirement will be worth Rs 400 crore over a three-year period. The agreement may then be extended for a further five years.

LG has a three-year OEM arrangement with Voltas under which it has already procured 1.60 lakh refrigerators for around Rs 110 crore. The Korean company''s refrigerator business has reportedly met a good response in the Indian market, and it is planning to double its existing 90,000 units a year order on Voltas to around 1,8 lakh units.

Voltas intends to make use of its Sanathnagar facility near Hyderabad to meet LG''s requirements. This plant has been kept out of the ambit of the joint venture between Voltas and AB Electrolux as Voltas had planned to manufacture refrigerators here to meet OEM requirements. Electrolux has agreed to provide enough orders to Voltas to enable it to operate the plant at full capacity.

Voltas plans to upgrade and modernise the facility with an investment of Rs 20 crore. It will have a capacity to make 300,000 refrigerators a year.

LG has meanwhile confirmed that it is in talks with Voltas. It has also revealed that a proposal to manufacture frost-free refrigerators on its own at its plant in India, while outsourcing direct cool refrigerators from OEM manufacturers.

Voltas has also found that there is an increasing demand for its visicoolers. LG is a client for this product, as are Pepsi Foods, Nestle, Cadbury and Amul. In 1998-99 some 75,000 visicoolers were sold to Pepsi. Amul needs these refrigerated storage and display units to store cheese, butter and other value-added milk products at the retail end.