Chinese TCL deal
China's big electronics company TCL Electronics is preparing to make a big change in its business model in India. The company is in talks with Indian companies to sell 51% stake in its display manufacturing plant in Tirupati, Andhra Pradesh. This step is considered to be part of the government's localization pressure and risk reduction strategy. The value of the deal can be between $600-800 million i.e. Rs 5,708 to 7,611 crore.
According to media reports, Standard Chartered is playing the role of advisor in this deal and potential buyers include Dixon Technologies, Amber Enterprises, Syrma SGS Technology, Epack Durable and Uno Minda. However, the talks are still at an initial stage and can be finalized in the next 2-3 months.
Located in Tirupati, Andhra Pradesh, this plant is India's only open-cell manufacturing unit, which makes essential components for TVs, smartphones, laptops and automotive displays. This unit operates under the local branch of TCL China Star Optoelectronics Technology. The company will retain 49% stake even after this deal and will remain the largest shareholder. It is being told that TCL wants to involve two investors. This model is similar to the structure recently adopted by Haier, where the company sold a stake in its Indian unit but retained control.
The company has already invested more than Rs 1,800 crore in this plant and it has an annual capacity to manufacture 80 lakh TV panels and 3 crore mobile displays. This is also TCL's largest display plant outside China. However, Dixon Technologies does not seem to be ahead in this race. Because it has already invested in joint venture with HKC. In such a situation, there may be an opportunity for other companies in this deal. Amidst the government's policy of promoting local manufacturing and efforts to reduce dependence on China, this step of TCL can bring a big change for the Indian electronics sector.
