Videocon to exit Philips & Electrolux

Saddled with debt three times its size, consumer electronics manufacturer Videocon Industries has decided to cancel its licensing agreement with Philips.Videocon had entered into a five- year brand ...
Videocon to exit Philips & Electrolux

Saddled with debt three times its size, consumer electronics manufacturer Videocon Industries has decided to cancel its licensing agreement with Philips. Videocon had entered into a five- year brand licensing agreement with Philips in 2010 to market the latter’s television sets in India. In 2013, the agreement was further extended and was supposed to expire in December 2017. Further Videocon is also mulling giving up its licence to make and sell appliances under Swedish brand Electrolux in India. The Videocon Group operates the Philips and Electrolux businesses through PE Electronics. In 2005, Videocon acquired 91.85% stake in Swedish appliances firm AB Electrolux’s loss-making Indian subsidiary Electrolux Kelvinator Ltd (EKL). Videocon was paying a royalty of around 3% to Philips. The company is looking to sell the rights after being unable to keep up production in the two brands without working capital, and a decline in sales. Videocon had consolidated debt of nearly Rs38,300cr, while its standalone debt was ~Rs19,500cr. Sales of Electrolux in India have stagnated since at least 2013, per data from its website. Moreover, sales of Philips have suffered the world over as the television market is overtaken by Chinese firms. In fact, this prompted Philips to sell its televisions business to Hong Kong-based electronics firm TPV Technology in 2012.

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