Electrolux invests large-scale
THE new kid on the white goods block is the $14 billion Swedish transnational, AB Electrolux. And it's aiming premium. Last month, it launched the first Electrolux products in India: two models of a 6.5 kg washer dryer priced at Rs 30,000 and Rs 45,000 respectively, the most expensive washing machines in the country. Electrolux expects to sell between 2,000 to 3,000 pieces of this totally imported, state-of-the-art washing machine.
And this month, Electrolux will launch the first of its range of refrigerators, beginning with a 165-litre model and then moving on to 185-litre and 210-litre models. At the end of the year, it will launch a 310-litre model, and eventually its largest refrigerator—a 400-litre model. "We'd like to manufacture all types of white goods within three years," says Chairman and Managing Director Arjan Gursahaney.
Though Electrolux has just begun operations in India, it hasn't exactly been smooth going for this TNC. In keeping with its worldwide policy of acquiring and managing domestic companies through wholly-owned subsidiaries, Electrolux had applied for the required permission in the initial years of liberali-sation, but permission has not yet been granted. "This has definitely affected our plans in India. We were hoping for a faster pace of economic reforms, unfortunately that has not happened," says a disappointed Gursahaney. Since the Government is not favourably inclined towards allowing 100 per cent subsidiaries in the consumer durables sector, Electro-lux is being forced to control the three listed companies it has acquired in India through a representative office. "This is reducing the flow of our investment into India, apart from inhibiting our plans to take over more Indian companies. We will now re-evaluate our plans and wait till the elections," Gursahaney adds.
At one stage in its global operations, Electrolux was acquiring new companies at the rate of 30 a year. In India, it acquired majority stakes in Maharaja International and Intron last April and December respectively, paying $18 million for the two companies. In 1982-83, it had acquired a 40 per cent stake in Eureka Forbes. Apart from this, the TNC will spend $20 billion to $25 billion in refurbishing the two factories. The Maharaja factory in Shahjahanpur, Rajasthan, currently has a capacity of 2 lakh refrigerators per annum, which will be increased to 6 lakh per annum. On the other hand, the Electrolux technical team has just finished evaluating the Intron factory which will initially produce 50,000 washing machines a year. Within a five-year period, Electrolux aims to capture 50 per cent of the washing machine market, apart from a major chunk of the refrigerator market.
All products introduced within this year will be marketed under the Electrolux brand name and will be priced at a premium. Besides, the Kelvinator brand name, which is currently with Whirlpool, the other international white goods major, will revert to original owners Electrolux with effect from January 1, 1997. "The Kelvinator brand signifies durability and affordability. Next year we will launch products under this brand name. Between the two brands, we will cover the entire spectrum of the market," says Gursahaney.
However, the Kelvinator brand would have been away from the consumer's eye for some months by the time it eventually reverts back to Electrolux, since Whirlpool is working to replace Kelvinator totally with the Whirlpool brand. And with Whirlpool already having taken a headstart, Electrolux urgently needs to get approval for its subsidiary, in order to control its investments better.