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Godrej-GE part ways in appliances venture -- Name change comes into effect

S. Muralidhar

K.R. Srivats

NEW DELHI, Jan. 4

THE American industrial conglomerate GE has formally exited the joint venture Godrej-GE Appliances Ltd, with the former completing the divestment of its equity stake in the venture, according to sources in the company.

The erstwhile joint venture has also been renamed as Godrej Appliances Ltd, reflecting the change in equity holding pattern and ownership. The company effected the name change today, the sources added.

The two joint venture partners have been in discussions for the change in equity holdings since the first quarter of the current fiscal. While details regarding the stake sale by GE to Godrej are still awaited, the partners are said to have completed the deal late last month.

Mr Vijay M. Crishna, Managing Director of the erstwhile joint venture, and Mr Scot Bayman, CEO of GE India, were not available for comment as both of them are abroad. Other company officials on the board of the joint venture declined to comment on the is sue.

However, sources said that Godrej has been mulling the decision to buy out GE's stake in the venture. The company is said have considered various options including giving a portion of the equity stake to some other joint venture partner or involving fina ncial institutions in the venture.

The joint venture Godrej-GE Appliances Ltd had been manufacturing and marketing refrigerators and washing machines. Godrej has been a long-standing player in the white goods industry, particularly in the small and medium size refrigerators segment. The c ompany decided to ally with GE Appliances, one of the largest American appliances manufacturer, due to the synergies that the latter could provide with its larger capacity appliances.

So, there was no clash between the products offered by Godrej and GE in the partnership, with most of the Godrej products falling in the segment below those manufactured by GE. However, offtake of higher capacity refrigerators and washing machines has no t matched expectations during the current fiscal.

Sources said that while the first three months of financial year 2000-01 recorded an upturn in sales volumes, the rest of the year had witnessed stagnant sales. In 1999, Godrej-GE had recorded a capacity utilisation of about 75 per cent. The joint ventur e's bottomline had also been under constant pressure.

The Godrej sources, however, said that the erstwhile joint venture might decide to continue marketing GE appliances and products through its established distribution network. The arrangement here between the partners may be fee-based or on a margin-shari ng basis, the sources said.