Consequently, Konka's stake in the joint venture is expected to rise to 70 per cent and that of Wittis to 30 per cent. At present, the Chinese electronics major controls 51 per cent stake in the company while the Hong Kong-based tuner manufacturer has 24 per cent stake.

A decision on this is expected to be taken next week when the board of Konka Electronics India meets in Hong Kong. The five member board of the company includes three representatives of Konka Group, besides a representative of Wittis.

Hotline promoter Anil Gupta, who is also vice chairman of the joint venture company, had earlier this month announced a decision to pull out of Konka Electronics India over differences on the management of the company. Sources close to company stated Konka was examiningvarious options on going about with its plans here following an announcement by Gupta to withdraw his stake in the joint venture company.

These sources further said Hotline is yet to communicate its decision to pull out in writing. Top Konka executives maintain that Hotline would continue as a partner in the venture till the Indian partner pulls out formally. Hotline sources say that the company's decision to pull out would be taken up at Konka Electronics India board meeting before the end of this month.

It is learnt that Konka group may convert the Indian subsidiary into a holding company for routing its investments into the country. The company is also keen to set up a fully owned subsidiary here.

Under one of the options under examination, Konka group may set up three or four companies as subsidiaries of the holding company to handle marketing, manufacturing and research and development. Alternatively, the existing joint venture company may continue as a marketing outfit while manufacturing and R&Dmay be set up as 100 per cent subsidiary of the Chinese company.

At a press conference here recently to announce the launch of its products in India, Konka had stated that the parent company has earmarked Rs 500 crore for investing in India. The group is planning to set up manufacturing facilities to make CTVs, refrigerators, washing machines, airconditioners, micro-wave ovens, PC monitors and host of office automation and communication products such as telephones.

Contract manufacturing pact to continue

Despite a decision to pull out of the joint venture with Konka group, Delhi-based Hotline is learnt to have decided to continue its contract manufacturing agreement with the Indian subsidiary of the Chinese company.

Hotline is also understood to have told Konka Electronics India executives that it has decided to set up an assembly unit in Calcutta where it could make colour televisions for the Chinese brand. Konka sources said, that Hotline has expressed a desire to continue its contractmanufacturing arrangement on a long term basis with the company despite strained relationship. Hotline had initially agreed to assemble CTVs for Konka at its facilities at Noida, near Delhi and Mohali, near Chandigarh. Konka, meanwhile, is planning to set up a manufacturing unit at Greater Noida and assembly units at several locations across the country.