After four years of trying to establish themselves in the Indian colour television (CTV) market, Sanyo and BPL, the equal joint venture partners in Sanyo BPL India, are likely to call off the JV by the year-end.
According to sources in the company, a review of the JV is under way and a decision to separate is likely to be taken soon.
According to the sources, Sanyo wants to focus on LCD and plasma televisions and other industrial equipment such as heavy-duty air conditioners, coolers and the like, while not being saddled with the conventional colour television segment, which is the strong point of BPL.
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“The JV was being done on the twin-brand strategy of promoting the Sanyo brand for premium products while leverage the BPL brand for mass colour televisions. Going forward, Sanyo may not want to continue to invest in the dual-brand strategy and this is one of the key reasons that may have prompted Sanyo to initiate moves to withdraw," a senior official in the company said.
No executives from BPL and Sanyo were available for comment.
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In August 2004, the two companies had entered into a 50:50 joint venture. Sanyo had paid around Rs 320 crore for the 50 per cent stake, while BPL had transferred its CTV business, including its two manufacturing units in addition to its entire sales and distribution divisions, to the JV as its 50 per cent stake in the venture.
Since the past four years, the JV was able to corner close to 5 per cent market share in the country's CTV market.
The senior executive of the company further added that the cost of picture tube for a conventional television is on the rise even as the price of LCDs and plasma TVs is on the decline.
"The market for conventional CTVs in India can at most exist for another 4-5 years before this technology fades out. BPL would want to leverage this to an extent by selling these conventional TVs for a few more years," the executive added.
Bangalore-based BPL has had more than two decades of technology relationship with the Japanese company, prior to inking the joint venture in an effort to get out of its debt pool of around Rs 1,400 crore.