Hitachi is bringing in Rs 16 crore to acquire 51.66 lakh shares in Amtrex. The company will be pay a premium of Rs 21 on each equity share of Rs 10.

Subsequently, in April this year, Hitachi stated that it was not yet ready to put investment on ground in the country. The Japanese company, instead, opted to co-brand the Amtrex products as Amtrex-Hitachi. Hitachi has been providing technological assistance to the Amtrex since 1990.

The two companies, at a press conference jointly addressed by Amtrex Appliances managing director Sanjay Lalbhai and Hitachi Home Electronics Asia Pte managing director Yuji Miyamoto, said that the board of the joint venture company will be reconstituted next month

Hitachi will have a few nominees on the board including a joint managing director.Additionally, Hitachi will assign expatriates to work in the joint venture company as managers in the areas of engineering, design and quality assurance.

Amtrex, has meanwhile, convened an extraordinary general meeting on Jaunary 26, 1999, to obtain shareholders approval for the joint venture and other related resolutions.

Amtrex chief executive officer Arvind Nair said the funds brought in by Hitachi would be deployed over the next three years in upgrading the assembly line and in procuring new machinery.

It has been further decided that the joint venture company will follow a dual brand strategy. Hitachi will be positioned as technically superior, high end brand, while Amtrex will be positioned as a mass market brand, with focus on institutional sales.

The Hitachi line would be priced at a premium of 5 per cent to 7 per cent to the Amtrex range. The company will also discontinue the co-branding exercise which had been put into place in April this year.

The dual-brand strategy is expected to fetchthe company a market share of 21 per cent in five years from the present share of 10 per cent. Amtrex is the third largest room airconditioner player in the market after Aircon Carrier and Voltas. The joint venture expects the airconditioners market to expand to one million units in five years.

The company further announced that the Hitachi range of airconditioners would be launched from March 1999. The joint venture company proposes to launch three models in March, another three models in May and four models in September 1999.

The Hitachi models will incorporate new rotary compressors developed and patented by Hitachi Japan. These new compressors, according to company executives, will reduce power consumption by 12 per cent.

The compressor along with certain other critical parts will be imported from Hitachi's facility in Japan. It is expected that the import content in the Hitachi range will be approximately 50 per cent.

Nair added that the company expected to export about 10 per cent of theproduction in the first year to markets in Saarc region, Middle-East and Africa. The two companies are expected to work togethe on the export initiative.

Incidently, the Amtrex facility is the only manufacturing facility for Hitachi in the tropical region.