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Videocon Group may be giving up its India rights in Philips TV business and Electrolux appliance business, due to its ongoing financial distress. This has caused a steep decline in its sales, reported Economic Times.
Videocon promoters will most likely cancel the licensing agreement they have with Philips and they will withdraw from their agreement with Electrolux, the Sweden-based company. An official said, “If the group gives up Electrolux, too, it will lead to further savings on royalty outgo and fixed costs. But a decision on Electrolux is yet to be reached.
Electrolux may set up direct operations in the country, as its sales are going down in India. Electrolux’s sales in India have fallen from an average Rs 250 crores to Rs 50-60 crores in this financial year.
Even Philips sales are dipping to a large extent. An executive of the industry told ET, “The business is generating revenue of Rs 18-20 crore per month, whereas it should be doing Rs 80 crore to Rs 100 crore per month to survive. This has made the operation unviable.”
Videocon Group now raises payments from its dealers before manufacturing their products, as opposed to its former operation of credit. The company owes Rs 20,000 crores to banks. This has led to the overall decline of Videocon group brands, like Sansui, Philips, Electrolux and Hyundai.
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