GE Appliances is set to divest its stake in the Rs 8 bn joint venture (JV) with Godrej & Boyce, Godrej-GE Appliances. GE holds 40% stake in the JV. It is expected that Godrej may buy out GE's share in the JV.
GE Appliances, a subsidiary of the US-based conglomerate General Electric Corporation, and Godrej & Boyce have been marketing a range of consumer durables in India since the last six and a half years. While the Godrej brand appears on refrigerators, washing machines, air-conditioners and cooking ranges, the GE name appears only on bigger capacity refrigerators, washing machines and de-humidifiers. Godrej-GE commands a 30% market share in the refrigerators segment and 12% in the washing machines segment.
The reason for parting of ways between the two partners is apparent. The partnership did not give the GE brand recognition among the mass Indian consumers, as its range was limited to the premium segment. Moreover, GE's desire to enter into the volume segment could not have been fulfilled under the present arrangement.
GE has indicated that the divestment of its stake in the JV does not mean its exit from the Indian market place. This means that GE in the near future it might float its own 100% subsidiary or go in for another JV, to speed up its brand presence in India.
GE's exit from the JV will not adversely affect Godrej in the near future, as a bulk of its sales come from the Godrej range. It has also built its own after sales service network and enjoys brand loyalty among its consumers. Godrej also has the option to go in for a JV with another foreign consumer durables major, to make up for GE's exit.
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