Anchor seeks buyers for brand Daewoo

Anchor seeks buyers for brand Daewoo

Author | Source: The Economic Times | Wednesday, Jan 04,2006 8:04 AM

Anchor seeks buyers for brand Daewoo

Just a year after entering the Rs 20,000 crore durables market, the promoters of Anchor-Daewoo Industries are understood to have approached heavyweights like LG, Samsung and Onida to buy the Daewoo brand and its manufacturing facilities in India. A successful electric accessories manufacturer, Anchor had hoped to cash in on the success of the South Korean durable brand in the country.

However, sluggish growth trends and a hugely price-competitive market have forced them to do a re-think on their strategy. The Anchor group, which had been a minor partner in the 87:13 JV with Daewoo, had picked up a majority stake with close to 90% equity in '03. It had also taken over a liability of Rs 70 crore as part of the deal, along with the brand rights for Daewoo. The group is understood to have made close to Rs 150 -200 crore investments in this joint venture.

When contacted, Hemang Shah, director, Daewoo-Anchor said that the company has not taken an immediate decision in this regard. “We will take a while to plan our future,” he said. None of the companies approached by Anchor seem to have shown any active interest in acquiring it. Videocon, generally open to such acquisitions, have the recently acquired brands such as Electrolux and Hyundai to take care of, sources said.

Informed sources said Anchor has made substantial losses in the joint-venture and will have to do some re-tooling or invest heavily in marketing and distribution systems to continue in business.

“Lack of knowledge about the business proved to be the group's undoing. The group faced a lot of marketing and distribution difficulty with the brand. Mere advertising will not sell the brand unless the required infrastructure is in place” said a top industry official. The group's investment in its Ranjangaon plant is understood to be more in the direct cool refrigerators segment although the real growth is now coming in from the frost-free segment.

Anchor currently makes and markets the Daewoo brand with technological support from the Korean company. Anchor Daewoo had targeted sales of Rs 60 crore including 50,000 CTVs in '04. It had proposed to focus on refrigerators and CTVs and get into other high-end products from next year. The Anchor Group had plans of setting up two new plants to make colour televisions at Bhuj in Gujarat and in Uttaranchal. The JV currently has two CTV and appliances manufacturing plants in Noida and Ranjangaon.

Globally, for '06, Daewoo Electronics, Korea is targeting $1.3bn in revenue from it's A/V business, $802m in revenue from its refrigerator and air-conditioner business, and $801m in revenue from its home-appliance business, for a total revenue target of $3bn. Daewoo Electronics survives to this day despite bankruptcy, with a new brand logo “DE”, but many of the other subsidiaries and divisions have become independent or simply perished under a reorganisation overseen by the Korean government.

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