Johnson-Hitachi JV to strengthen India air conditioning business

A specialist JV company will be formed which will manage the air conditioning business interests of Hitachi and Johnson

US-based technology & industrial major Johnson Controls and Japanese appliance maker Hitachi on Thursday said they were entering into a global joint venture (JV). The move, announced in Switzerland’s Davos, is expected to affect the latter’s India business.

With a market share of 12 per cent in a 3.3-million-unit market, Hitachi Home & Life Solutions is India’s third-largest room air-conditioner maker, after Voltas and LG. Under the deal, Johnson and Hitachi will form a specialist AC company, in which the US major will have a 60 per cent stake and Hitachi the rest. The company would be unveiled in India, said Hitachi India spokesperson.

In the domestic market, Hitachi Appliances, part of the promoter group, has a 72.41 per cent stake in Hitachi Home & Life Solutions. The rest 1.84 per cent out of the total promoter group stake of 74.25 per cent is held by Hitachi India.

In a statement to stock exchanges, Hitachi Home & Life Solutions said the stake of Hitachi Appliances would be divested into the global JV. "By virtue of this, Hitachi Home & Life Solutions will become a subsidiary of the new JV," the Hitachi India spokesperson said.

The formation and consequent rollout of the JV will mean that it will pusher harder in gaining share in India. In the last two years, Hitachi, which stood at the number fifth position in room air conditioners, slowly began moving up thanks to aggressive pricing, multiple models, and technology and after-sales service.

Last year it overtook Panasonic to occupy the third position in room ACs by a small margin. Panasonic and Samsung are reportedly tied at the number fourth spot in room air conditioners at 11% share respectively.

Hitachi is expected to unveil its new line-up of room ACs shortly in a bid to create the necessary buzz in the marketplace. AC makers typically launch their new products by February-March before the onset of the summer in April.