The notice dated September 30, 1999--a copy of which is with The Financial Express--states that Aiwa Japan is terminating itse agreement with effect from December 31, 1999.

The letter signed for Aiwa Gulf FZE by senior vice president Hisashi Tabei cites "breach of contract" as the primary reason for calling off the alliance. The notice has, however, not elaborate on instances that amounted to breach of contract.

Baron Electronics managing director Kabir Mulchandani denied that the tieup had been called off. He also denied that the company had been served any notice terminating the agreement.

The termination notice follows a meeting between Aiwa top brass and Mulchandani held earlier last month in Japan.

According to industry sources, Aiwa was unhappy with the quality of products sold under its brand name, though the Japanese company did not have any complains with the marketing strategy. Aiwa has emerged as one of the top five brands during the World Cup cricket tournament held between May-July 1999.

According to other industry sources, Aiwa has called off the alliance with Baron under pressure from parent Sony Corporation. These sources claim that Aiwa may now come back with a wholly-owned operation.

Significantly, Aiwa and Baron had announced setting up of a jointly-owned manufacturing facility in India late July. A Baron Electronics press release had stated that the two companies were cementing their relationship by setting up one of the latest audio and TV factories in India with capacity to manufacture 1.2 million Aiwa CTVs, 0.5 million Aiwa hi-fi systems and 0.5 million general audio products. The technical know-how for the factory was to be provided by Aiwa, Japan.