Akai-Videocon joint venture
By Mohini Bhatnagar | 17 Mar 1999
Akai Electric Co Ltd. and Videocon Ltd. are floating a joint venture company, Akai India Ltd., in whose Rs 100 crore equity Videocon will have a 70 per cent stake and Akai 30 per cent. The Akai India board will initially have four directors, three of them Videocon nominees and one from Akai. The joint venture marks the end of the marketing agreement that Akai had with Baron International for the sale of its television and audio products in India.
Having used Baron's aggressive pricing tactics to make a splash, Akai will use Videocon's distribution and marketing strengths to consolidate itself in India. The tie-up will help Videocon, which is in need of new products to combat the onslaught of a host of foreign brands. Akai's market share, according to ORG figures, rose to 16 per cent in 1998-99. Videocon itself is a strong Indian brand. But it saw marginal deceleration in growth in 1998-99, with sales slipping by one percentage point from the previous year, and market share slipping two percentage points to 19 per cent.
Videocon has, for some time now, followed a multi-brand strategy, having tied up with Toshiba and Sansui during 1998-99. The company's main thrust of low pricing was blunted by the overall fall in color TV prices in 1998-99. Participation in the joint venture with Akai is part of Videocon's efforts at attaining global status. Akai India plans to make and sell 3.5 lakh color TV sets in the first year of operations, and 5 lakh in the second year. While the design and micro components would be imported, all other parts, including picture tubes and other critical components, will be sourced in India. The company intends to introduce seven colour TV models, a flat screen TV model called Plasma, audio products in the 270-4,000 watt range, digital video discs, Dolby prologic home theatre systems and a combi-system inclusive of a television and a video-compact disc player.
According to PN Dhoot, Akai India's chairman, the company has started a face-to-face club to allow customers to address complaints directly to the company. Akai India will handle the after-sales service. Videocon has recently revamped its corporate identity and introduced a new corporate logo. The campaign cost the company Rs 10 crore in the first six months.. Akai is owned by Semi-Tech, a Hong Kong-based company, which also owns two other global brands, Singer and Sansui.
