GE Appliances is the minority partner in the venture with a 40 per cent stake, while Godrej & Boyce held the balance. The latter, which has recently been bailing out other group companies in strife, will buy out GE's stake.

The two companies in a joint statement released on Wednesday said preliminary discussions have been initiated to enable GE to divest its stake.

The official reason cited for the split is that the move is a consequence of GE's global brand strategy of focussing on markets where the GE consumer brand franchise for appliances is strong.

Hence, India, which GE's CEO Jack Welch in his last visit to the country had said was a focus market, now does not appear to fit in GE Appliance's scheme ofthings.

GE India CEO, Scott Bayman said that this does not diminish GE's commitment to India "where GE's key businesses have invested considerably in establishing a strong presence."

"We continue to move forward on a wide variety of initiatives in India," he added.

Industry sources point out that a tiff between the two promoters has been going on for some time as GE had been insisting on raising stake which has not found favour with Godrej. Godrej officials, however, deny any infighting between the partners.

Godrej & Boyce managing director, Jamshyd Godrej, said: "A change of this nature would not cause any impact on our commitment to serve customer and dealer needs in the Indian market place. We will continue to access both technology and products from around the world as well as leverage our facilities and capabilities."

The JV, set up in 1994 when the consumer durables industry was growing at an exponential rate, have failed to take off due to recession that hit the industry soon after.

Againsta turnover projection of Rs 3,500 crore for the 1996-97 fiscal, the joint venture managed to notch up only Rs 813 crore for the year ended March 31, 1999.

It had also planned a large investment of at least a $100 million in a joint venture with an international major to manufacture CFC-free compressors, which has failed to take off. The company had even announced plans to launch colour televisions, which has come unstuck.

Under the Godrej brand, the Godrej-GE sells refrigerators, washing machines, air-conditioners and cooking ranges, while the GE brand is leveraged to sell top-end refrigerators, washing machines and de-humidifiers.

The split is the second major to haunt the House of Godrej after Procter & Gamble walked out of a venture to manufacture and distribute soaps in 1996.

Godrej & Boyce, which is a closely-held operating-cum holding company of the Godrej group, has expansive overseas operations. In India, it has eight business divisions which manufactures a wide range of consumer durables andindustrial products.

The company recently announced two bailout packages for group companies--Godrej Soaps and Godrej Foods. As part of the package, Godrej & Boyce will pick-up the entire stake of Godrej Foods in Godrej Pillsbury at a consideration of Rs 31.13 crore.

Further, it would also acquire 22.5 per cent of Godrej Soaps in Godrej Sara Lee for Rs 99.47 crore. The move is aimed at enabling the companies to retire high cost debts.