Ahmedabad: The year just gone by closed with a significant development for the air-conditioner industry.

In a very low-profile move, Hitachi Home & Life Solutions Inc, the $3.82-billion Japanese home appliances giant, picked up the entire 19.4-per cent stake in Amtrex Hitachi Appliances (AHA), the Ahmedabad-based Rs 239-crore air-conditioner company.

The development saw the exit of the Lalbhais from the AC segment and, very likely, also spelt the beginning of the end for the Amtrex brand of ACs.

While the Hitachi buyout of the Lalbhai-holding from the equal-stake joint venture (JV) was not totally unexpected, the almost hush-hush manner in which the deal was inked surprised many an industry-watcher. AHA officials attribute the unobtrusiveness of the event to the fact that requisite regulatory approvals are still pending.

The grand entry
Consequent to the Lalbhai exit, Hitachi's shareholding in the company will increase from 35.2 per cent to 54.6 per cent, making it the majority shareholder. The balance 45.4-per cent shares will remain with the public, financial institutions and banks.

''The development marks the entry of Hitachi into the Indian white goods and home appliances market in a big way,'' says a leading financial analyst. ''Apart from strengthening its hold on the AC market, Hitachi is sure to bring in its other products in the consumer electronics and white goods sector.''

Confirming as much, Kunio Sebata, president and CEO of Hitachi Home and Life Solutions, says: ''India is a strategic market for us and will be a part of G40, our global business expansion project, which is aimed at enhancing overseas sales ratio to 40 per cent by 2004.''

Sebata says after acquiring the majority stake in Amtrex Hitachi, the company intends to expand its operations in India by strengthening its air-conditioner business in this high-growth market.

The realities involved
As for AHA, it already has a market share of 14 per cent in the AC market. The Logicool i range has done particularly well and this brand has helped the company to achieve a volume growth of 40 per cent during the summer of 2002.

The success of the Logicool brand, coupled with the buying out of the Lalbhai stake in the company, has put a question mark on the future of the Amtrex range of ACs since Hitachi will be keen on extending its own range. Industry watchers agree that the Amtrex brand of ACs is likely to be phased out.

Commenting on his group's exit from AHA, Sanjay Lalbhai, managing director, Arvind Mills, the flagship company of the Lalbhai group, and chairman, Amtrex Hitachi Appliances, says: ''We have enjoyed a long and fruitful business association with Hitachi for more than a decade. Since introducing Hitachi brand in India in 1999, it has emerged as one of the top players in the highly competitive Indian RAC market.''

The Lalbhai group's decision to divest its stake is in line with its corporate strategy to focus and leverage its core strengths in the textile sector, insists Lalbhai.

With the exit of yet another Indian partner from a JV with a multinational company, it now remains to be seen what Hitachi has in store for the Indian consumer.