Philips Monday announced it had purchased leading Indian kitchen appliance maker Preethi for an undisclosed amount. Royal Philips is a Dutch consumer electronics maker. The investment is aimed at turning the Dutch firm into a leader in India’s fast-growing market.
In a statement, Royal Philips Electronics said it has agreed to acquire the assets of the Preethi business, a leading kitchen Appliances Company in India based in the southeastern city of Chennai, with around 850 employees. The consumer electronics manufacturer bought the Chennai-based appliance maker Maya Appliances, brand owner of Preethi range of kitchenware.
Preethi is a household name in the mixer grinder space in India. The company is expected to earn Rs 400 crore to Rs 450 crore as revenues for the current fiscal period. Upon closing of this transaction in the second quarter of 2011, subject to certain contractual and other conditions such as regulatory approval, Preethi will become part of the Domestic Appliances business group within Philips’ Consumer Lifestyle sector.
According to sources, the acquired business will be run from the business group’s newly established global headquarters in Shanghai, headed by Murali Sivaraman, former CEO of Philips India.
Maya Appliances director of operations, T T Siddharth, said the firm currently controls 80% market share in the mixer grinder space, whereas in South India, it has a 45% market share.
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 (R&D) to build on its existing eight product categories and possibly create more. It will also use Philips distributor network to establish its presence in the North, East and West of the country.
Siddharth reiterated the firm has already made inroads in the Maharashtra market and will be looking at entering Gujarat, Orissa and National Capital Region (NCR) shortly.
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.
Analysts have reiterated that synchronizing after-sales service personnel will be a huge benefit for Preethi as will the distributor network since the brand is virtually unknown anywhere else in the country, except for the South. 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.
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