Japanese conglomerate Toshiba Corporation is acquiring a major part of Vijai Electricals Ltd's transmission and distribution (T&D) business for around $200 million (Rs 1,300 crore), as per a company statement. The acquisition will be completed in November this year.
Toshiba will establish a new company that will absorb the acquired T&D business and also integrate Toshiba's design and manufacturing technologies for T&D systems. The new company will also enter other growing markets in India, including power electronics systems such as high voltage direct current power transmission and static VAR compensators for high voltage network and railway power supply systems.
This new firm will be positioned as a core production base for expanding Toshiba's T&D business in India and the global market, alongside its other bases in Japan, China, Brazil, Russia and Southeast Asia.
"The acquisition is necessary for our global T&D strategy and Vijai's products and sales channel provide us with an ideal fit for our T&D business in India and beyond. It will support us not only in the Indian market, where we aim to secure a 20 per cent market share within five years, but in reinforcing our position in the global market, by strengthening our worldwide network," said Takeshi Yokota, corporate vice-president of Toshiba.
Led by its chairman Dasari Jai Ramesh, four-decade-old Vijai Electricals manufactures and sells electricity distribution transformers. The firm expanded its T&D business in 2006, when it entered the power transformer and switch gear businesses. The firm has manufactured and supplied the world's highest voltage class 1200 KV power transformer.
It had raised around Rs 120 crore from private equity firm 3i in 2006 which had picked a small minority stake in the firm valuing it at over $550 million. Last year reports had indicated that the promoters as well as the PE investor were looking to exit the firm.
The T&D market size in India is expected to grow to over $4 billion by 2015 and Toshiba is eyeing a big pie of the same through the deal.
Toshiba is a solutions provider and marketer of advanced electronic and electrical products and systems. The company was founded in 1875 and has 590 firms under its fold with 206,000 employees globally and annual sales of over $60 billion.
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