Godrej, GE part ways

30 September 1999

GE Appliances, the subsidiary of the US General Electric Corporation, is all set to break off its Indian joint venture partnership with Godrej & Boyce Mfg Co. It said in a statement jointly issued with Godrej & Boyce that it is in preliminary discussions to divest its equity investment in the 40:60 joint venture, Godrej-GE Appliances, attributing the decision to its global brand strategy "that focuses on markets where the GE consumer brand franchise for appliances is strong".

The joint statement said GE intends to divest its stake in the Rs 813-crore white goods manufacturing company, although it has not spelt out the beneficiaries. Market sources feel the stake will be available to the Godrejs at a comparatively low price as GE is virtually exiting the appliances business in India.

Scott Bayman, president of GE India, has, meanwhile, categorically stated that GE''s other investments in India will not be affected by this decision. "This does not in any way diminish GE''s commitment to India, where GE''s key businesses have invested considerably in establishing a strong presence in India. We continue to move forward on a wide variety of initiatives in India," he said.

GE has not been particularly successful with its joint ventures in India. At least two of them, GE Apar and Countrywide Consumer Financial Services (a GE Capital joint venture with the Housing Development Finance Corporation) had very brief lives. This experience may have compelled the global conglomerate to rethink in terms of setting up 100 per cent subsidiaries in India given the relaxed foreign direct investment norms and the current regulations governing setting up of wholly-owned subsidiaries by multinational companies.

Mr Bayman says GE has benefited immensely from its association with the Godrej group. "The strength of the Godrej brand and the integrity of the Godrej group are well recognised. Since its inception, Godrej-GE Appliances has experienced growth and increased value," he said.

Jamshyd Godrej, managing director of Godrej & Boyce Mfg Co, feels the GE decision to quit the joint venture will not cause any impact on the company''s commitment to customers and dealers. "We will continue to access both technology and products from around the world as well as leverage our world class facilities and capabilities to offer products and services best suited to the aspirational needs of our customers," he said.