Videocon will now take over the three manufacturing facilities of Electrolux Kelvinator in India at Shahjanpur (Rajasthan), Warora (Maharashtra) and Butibori (Maharashtra).
Under a separate licensing agreement with AB Electrolux, the Videocon group will distribute products under 'Electrolux' and 'Kelvinator' brands in India.
As a result of this strategic partnership with the Videocon Group, Electrolux will move from a subsidiary to a licensing model, an Electrolux release said.
The Swedish white goods major said it will continue its presence in India and was expecting to source goods and services to the tune of $300 million per year by 2007.
"Electrolux's business with component suppliers, IT outsourcing companies and call centre operators will continue to grow in India. In addition, AB Electrolux is looking at developing India as global source for goods and services with a target of $300 million yearly by 2007," Electrolux Asia-Pacific CEO and acting CEO of EKL, Peter Birch said.
Electrolux expects to strengthen its presence in South Asia by making available its products through the restructured Videocon marketing and distribution network.
The network will also provide after-sales service and spare parts of all Electrolux appliances, it said.
Under the licensing agreement, AB Electrolux will set up a new branch office in India which, together with Videocon, will promote sales of Electrolux products. The branch office will also manage the global sourcing needs of the company from India.