KOLKATA: Netherland’s Royal Philips will transfer the India rights of its television brand to Hong Kong’s $9.6-billion TPV Technology after its erstwhile India partner Videocon NSE 1.38 %, weighed down by debts, failed to pay royalty for the brand, two senior industry executives said. The executives said TPV Technology already had the global rights for the Philips television business for the past seven years except the Indian market, where it was with Videocon.
TPV plans to relaunch Philips first in Indian e-commerce marketplaces and then to brick-and-mortar chains and will hire Philips TV team from Videocon, they said.
“Videocon is not in a position to pay the 3% royalty to Philips as part of the brand licensing agreement whereby Philips has decided to give India rights to TPV. TPV will also manufacture the televisions locally to save tax, which will allow it to price them aggressively,” an executive said. TPV makes monitors and televisions for several global brands apart from distributing of its own brands — AOC and Envision —and licensed Philips monitors, TVs, mobile phones and tablets.
Debt ridden Videocon was unable to sustain production of several brands due to working capital crisis and consequently the Philips television range had almost vanished from the market in last few months. Videocon used to sell the Philips and Electrolux range through a separate company, PE Electronics.
Lenders, led by the State Bank of India NSE -1.12 %, recently filed insolvency petitions at the National Company Law Tribunal against more than a dozen Videocon group companies that cumulatively owe about Rs 13,000 crore.
An email sent to TPV Technology did not elicit a response, while its public relation agency confirmed the deal for the Indian market but did not elaborate. A Philips spokesperson said PE Electronics continues to sell and service Philips branded televisions in India. “If this situation changes, we will inform our relevant stakeholders in India, including our business partners, consumers and the press,” he said.
ET was the first to report in March that Videocon may give up India rights for Philips and Electrolux due to the financial crisis. The executives quoted earlier said that under Videocon, the Philips television business of late was generating revenue of Rs 18-20 crore per month whereas it should be doing Rs 80-100 crore per month to survive.
No decision has been taken about Electrolux yet.
The Rs 22,000-crore Indian television market has seen the entry of several global brands like Xiaomi and Thomson lately. While Samsung is the market leader, LG and Sony are in the second and third spots respectively.