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Konka India to be split into marketing, production cos

Partha Ghosh

NEW DELHI, Aug. 28

CHINESE consumer electronics giant, Konka Electronics, has proposed to split its Indian subsidiary, Konka Electronics (India) Ltd (KEIL), into two separate companies handling production and marketing respectively.

As per the current proposal, Wittis of Hong Kong will partner Konka in the production venture. The existing subsidiary, which has Government permission to manufacture as well, will continue to take care of the marketing activities.

Production of colour televisions (CTVs) _ currently restricted to assembling of imported knocked-down kits at facilities of Indian OEMs _ will be handled by the new company. A greenfield manufacturing unit may also be on the anvil, according to reliable sources.

The company is expected to make an announcement in this regard during a visit here by senior company officials during the first week of September, according to reliable sources.

The KEIL chief, Mr. Ronald Zhang, is being replaced by Mr. Liao Ruoji, who will be assuming charge as Managing Director of the Indian outfit around the same time, they said. Mr. Zhang has been with the company since its inception around a year-and-a-half ago.

Senior Konka officials declined to comment on the restructuring, stating that any such plan will be announced ``officially'' once it was finalised. But they confirmed that Mr. Ruoji was taking over soon, replacing Mr. Zhang. According to sources, Mr. Ruo ji's exact responsibilities will be made known as soon as the structure of the two companies are finalised. The restructuring will require the approval of the Foreign Investment Promotion Board (FIPB).

As per Konka's original plan, which was amended later to drop the Delhi-based Hotline group as a partner, KEIL would manufacture as well as market televisions and a host of consumer durables products in the country. A modern plant was proposed to be set up at Greater Noida (Uttar Pradesh), near Delhi, complete with a residential site colony for the employees.

A senior Konka official had told Business Line last year that a separate company was being mulled for manufacturing purposes and an investment of Rs. 250 crores was required for the plant.

Till recently, Konka had said that it had not been able to decide on the plant as low volumes would not justify such large investments. On the other hand, another Chinese player, TCL, had recently announced that it would set up a CTV plant in collaborati on with the Baron group.

Incidentally, Japanese consumer durables major, Matsushita, has a similar structure in India. While manufacturing of CTVs, washing machines, refrigerators, dry cells and kitchen appliances, etc, are handled by separate joint venture companies such as Mat sushita TV and Audio Company Ltd (MTAIC) for CTVs, marketing of these products is done by National Panasonic India Ltd, a wholly-owned subsidiary.