Videocon plans JV with L&T for power plant, says report

18 July 2007

Mumbai: Consumer electronics major Videocon Industries is diversifying into electricity generation and supply and mining of minerals, including coal. The company is currently in talks with engineering and construction major Larsen & Toubro Ltd to float a new power company, reports quoting its managing director Venugopal Dhoot said.

Videocon and L&T will be equal partners and initially invest Rs4,500 crore ($1.1 billion) in a 1,000 MW coal-based power plant in Gujarat, the report said.

"In order to derisk the business model, the company has identified power generation and trading and dealing in various minerals, including coal, required for power generation for the purpose of expansion and diversification," Videocon had earlier said in a note to its shareholders.

The company had also sought shareholders'' approval for this diversification through a postal ballot as the present "main object clause" of the memorandum of association does not allow it to carry on business of generation and supply of power or deal in coal.

L&T also said it would form three wholly owned units for power, railway and shipbuilding and launch a $1 billion infrastructure fund.

Videocon, however, maintained that it would continue to focus on its prime business segments - consumer electronics goods, home appliances and exploration of oil and natural gas. But it has stated "the proposed diversification will prove beneficial to the growth and development of the company.