By Dilip Maitra

Less than four years after the Rs 1,290-crore Videocon International (Videocon) and the Rs 1,291-crore BPL made common cause to revive the sick television picture tube-maker, Uptron Colour Picture Tubes (Uptron), the two partners are at loggerheads. Last month, Videocon filed a petition with the Board for Industrial & Financial Reconstruction (BIFR) stating that BPL had failed to comply with the board's rehabilitation package.

Alleges Venugopal Dhoot, 44, CEO, Videocon: "We joined hands with the Nambiars (of BPL) in good faith. But they have breached the agreement" Denies A.R. Rajaram, 39, company secretary, BPL: "The group has not violated the BIFR orders (dated April 18, 1996)." In fact, both Videocon and BPL differ with the spirit of the Rs 228-crore revival plan which stated that Uptron's equity of Rs 42.49 crore would be written down to Rs 4.25 crore. Subsequently, the equity was to be raised to Rs 39.84 crore where BPL's contribution of Rs 19.34 crore--plus a part conversion of unsecured loans given by BPL to Uptron--would give it a 51 per cent control while Videocon's Rs 7.50 crore would give it a 19 per cent stake.

Obviously, controlling Uptron--which can produce 10 lakh colour picture tubes (CPTs) per annum--is crucial in the cut-throat Rs 4,000-crore colour television (CTV) segment, in which BPL has a 23 per cent marketshare, while Videocon is the leader with 26 per cent. For the Rs 2,400-crore Videocon Group, a CPT unit is more important as it also manufactures 25 lakh pieces of glass shells--a key component for CPTs--every year.

The Dhoots, in their petition to the BIFR, claim that the BPL management "completely sidelined Videocon," and did not allow them to invest--by not intimating them when to make their contribution--Rs 7.50 crore in Uptron's new equity. It also adds that the revival was to be "jointly carried out by both companies." BPL's Rajaram, who maintains that Videocon was only an "associate" as per the BIFR order, contends that "Videocon took no interestand did not even fulfil its obligation to contribute the amount of Rs 7.50 crore within the prescribed period."

In fact, BPL takes the credit for rehabilitating Uptron and commencing trial production at the Ghaziabad (Uttar Pradesh) plant. After all, the Nambiars picked up 76 per cent of the company's equity, spent nearly Rs 70 crore to revive the unit, which is now producing 30,000 CPTs a month, and is likely to finish the first year (ending September, 1998) with a turnover of Rs 170 crore. They are also responsible for renewing the contract for technology sourcing with the $48.41-billion Toshiba of Japan, which has a 1.5 per cent stake in Uptron.

The Dhoots also allege that the Industrial Credit & Investment Corporation of India (1996-97 income: Rs 4,510 crore), as an operating agency of the revival package, failed in its role as it couldn't make BPL comply with the BIFR directives. For example, the BIFR order clearly mentioned that BPL will have to buy back 50 lakh shares from the financial institutions (FIS) at Rs 60 per share in 1996-97, if the share price fell below Rs 60. Says Dhoot: "BPL has caused a loss of Rs 30 crore to the FIs," as the price of the Uptron share dropped close to the par value of Rs 10, and, in fact, are not traded any more. But BPL says it did not buy back the shares because "the FIs did not exercise the option of selling them."

As the picture gets blurred in the battle for picture tubes, the BIFR will tinker with the control panel to decide whether BPL violated its order. But neither the Dhoots nor the Nambiars are likely to give up this fight for Uptron, which is the ideal fit to their backward-integration gameplan in the CTV sector.

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