Electrolux drops plan to make goods for others

Electrolux Kelvinator Ltd (EKL) has shelved plans to use its excess capacity as a outsourcing platform top produce goods for other companies.

"There are some players who showed interest in using our capacities. Given EKL's plans for the future, we have decided not to offer the excess capacities to other parties," Rajeev Karwal, managing director and CEO of EKL, said.

The company plans to expand operations in India in the future and it would rather retain the capacity for own use. EKL has phased out the Kelvinator brand completely. It would now focus on pushing the Electrolux brand in the Indian market.

"We have restructured the company in terms of rationalisation and manpower rightsizing. Now, we are looking at repositioning the brand with new offering and new communication strategy. With so many new initiatives, sales will definitely look up," Karwal said.

The company has installed capacities of 7,50,000 for manufacturing refrigerator in its two plants located at Shahjanpur (Rajasthan) and Warora (Maharastra). Capacity utilisation has at its plants has not been high.

EKL, however, expects the company to turn around by 2005 end and report profits.

The refrigerator industry in India is suffering from huge over capacity at the present. While installed capacity was around 6 million pieces, annual sales stood around 3.5 million pieces.

Capacity was likely to rise by another 0.7 million pieces after LG's plant is commissioned later this year.

Karwal said the export opportunities in refrigerators has opened up for EKL. "International marketing enquiries from Electrolux is coming up for ozone-free and frost free refrigerators," he informed.

Microwave ovens launched

EKL has forayed into microwaves with four models. It will be importing its products from Thailand and China. The Indian market for microwave has gone up from 10,000 units in 1997 to 300,000 units and it is growing at 25 per cent per annum.

Karwal said the company would also launch air conditioners (AC) in the Indian market soon.

"Electrolux will continue on four product categories in 2004, refrigerator, washing machine, microwave and air-conditioner. The company is spending Rs 16-18 crore on new product development in 2003 and 2004," he said in Kolkata.