Royal Philips Electronics, which manufactures electronic consumer goods, has acquired Chennai-based appliance maker Maya Appliances, the brand owner of the Preethi range of kitchenware.

Philips said in a media release that it has agreed to acquire the assets of the Preethi business, a leading kitchen appliances company in India. ''This will make Philips the clear leader in this specific fast-growing segment within the Indian domestic appliances market,'' it claimed.

Preethi, a well-known brand in mixer-grinder products, was established in 1978. The company is expected to earn Rs400-Rs450 crore as revenues for the current fiscal.

Upon closing of this transaction in the second quarter of 2011, which is subject to certain contractual and other conditions such as regulatory approval, Preethi will become part of the domestic appliances arm in Philips's consumer lifestyle business. As of now, both companies have signed an agreement of intent (AoI).

Reports say that it will be led from the Philips Group's newly established global headquarters in Shanghai, headed by Murali Sivaraman, former chief executive of Philips India.

"In Tamil Nadu, we have a nearly 80 per cent market share in the mixer grinder space. And in South India as a whole, we have a 45 per cent market share," said T T Siddharth, director (operations) of Maya Appliances.

Philips will use Maya Appliances' manufacturing facilities in Tamil Nadu and Himachal Pradesh to manufacture Philips products for India. Maya, on the other hand, will leverage Philips' research and development to build on its existing eight product categories and possibly create more. It will also use the Philips distributor network to establish its presence in the north, east and west of the country.

"We've already made inroads in the Maharashtra market and we will be looking at entering Gujarat, Orissa and Delhi shortly," Siddharth said.

Preethi has 14,000 service outlets and has 850 direct and 2,000 indirect employees. Philips, a manufacturer of medical equipment, televisions, lighting systems and consumer appliances, employs about 119,000 people in more than 60 countries.

"Synchronising after-sales service personnel will prove to be a huge benefit for Preethi as will the distributor network, since the brand is virtually unknown outside southern India," said an industry watcher.

"While in the south, Preethi is strong enough to run on its own steam, making its association with Philips public in other parts of the country will help the brand. Also, they should maintain their current strategy of competitive pricing."