Mumbai : Matsushita Electric Works Ltd. said on 23 April it had bought an 80% stake in India’s Anchor Electricals for 50 billion yen ($420 million), the Japanese company said on 23 April.
But unlisted Anchor said in a statement 50 billion yen amounted to Rs20 billion , or $480 million, but did not say what exchange rate it had used.
The deal, the biggest by a Japanese firm in India, is expected to help Matsushita Electric Works, which makes building materials and lighting equipment, make 15% of its overseas sales from India in about five years, a Matsushita official said.
Osaka-based Matsushita Electric Works, which aims to boost its overseas sales to 320 billion yen ($2.7 billion) by the year to March 2011 from 222 billion yen in 2005/06, said the investment was fully self-financed.
Matsushita Electric is a unit of Matsushita Electric Industrial Co. Ltd., the world’s largest consumer electronics maker that sells Panasonic and National brands of televisions and sound systems in India.
Mumbai-based Anchor is India’s top maker of electrical construction materials such as lighting fixtures and electric wires, with a market share of over 60% in an industry growing at about 30% a year.
“So far we have no presence in India. So, with this we would be taking a giant step,” Toshihide Arii, who will become chairman of Anchor Electricals, told reporters in Mumbai.“We are aiming at seven years to get back our investment,” he said.
Matsushita will be paying about 15 times per share earnings, for the year ended 31 March, 2007, an Anchor official said.
“There is no listed comparison for Anchor,” Atul Shah, managing director at Anchor Electricals, said.“We thought of an IPO for realising the value of our business, but decided on Matsushita given that there’s a need for product innovation and research and development.”
Anchor posted a net profit of Rs1.87 billion on revenue of 9.22 billion for 2006/07, Shah said.India’s organised electrical wires market is estimated to be worth Rs23 billion a year, Shah said. There are also many unorganised small firms in the business.
Ahead of the announcement, shares in Matsushita Electric closed down 0.1 percent at 1,325 yen, roughly in line with the Nikkei average.Lazard advised Matsushita and Kotak Investment Bank advised Anchor in the deal.
Suzuki Motor Corp. had held the record for the largest investment in India, when it paid $285 million in 2002 to buy an additional stake in car maker Maruti Udyog Ltd., according to Dealogic.