Thermax, Fuji Electric call off joint venture
By Usha Somayaji | 26 Feb 2000
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Indian energy and environment engineering major Thermax and process control giant Fuji Electric Co. Ltd of Japan have decided to dissolve their four-year-old joint venture, Thermax Fuji Electric Ltd (TFEL). The joint venture will close as of March 2000.
The project, begun in 1996, has been found to be unviable in the face of poor demand growth and changing technology. "The market for transmitters did not grow the way we expected," says Abhay Nalawade, managing director and CEO, Thermax Ltd. "In this situation, we did not hope to break-even for another few years."
With transmitter technology changing, Fuji preferred to centralise
manufacturing operations in Japan, says Nalawade. Thermax on its part also proposes to restructure its strategy and focus on core competencies. The joint venture will be meeting all its financial obligations, he says, including bankers, suppliers, and employees. Total losses amounting to Rs 14 crore have been taken care of, partly through equity write-off (Rs 4.5 crore
each) and partly through taking back of assets. "The company will have no financial obligation left after the closure."
Of the 105 employees of TFEL, former Thermax employees are being absorbed back into Thermax. The others are being compensated and released.
The project, begun in 1996, has been found to be unviable in the face of poor demand growth and changing technology. "The market for transmitters did not grow the way we expected," says Abhay Nalawade, managing director and CEO, Thermax Ltd. "In this situation, we did not hope to break-even for another few years."
With transmitter technology changing, Fuji preferred to centralise
manufacturing operations in Japan, says Nalawade. Thermax on its part also proposes to restructure its strategy and focus on core competencies. The joint venture will be meeting all its financial obligations, he says, including bankers, suppliers, and employees. Total losses amounting to Rs 14 crore have been taken care of, partly through equity write-off (Rs 4.5 crore
each) and partly through taking back of assets. "The company will have no financial obligation left after the closure."
Of the 105 employees of TFEL, former Thermax employees are being absorbed back into Thermax. The others are being compensated and released.
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