Videocon Industries Ltd - Consumer
Electronics - India
Videocon Industries Ltd
Strategic Direction
·
VIL is expected to drop
non-performing brands and focus on profitable components of its business as
part of a major restructuring process.
·
The founding Dhoot family has
global ambitions for Videocon, and there is a focus on core sectors like
energy, telecom and retail.
·
In the consumer electronics
sector, the company faces a strong challenge from multinational brands that can
spend more on R&D and advertising. VIL recognises that it has a strong,
well-recognised brand in Videocon, and this will help it in its push into
smaller markets. Diversifying into
allied businesses like DTH, mobile phones and durable goods retailing though
its NEXT chain are all expected to provide synergies for the company in the
Indian consumer electronics market.
·
Since 2004, VIL’s strategy in
consumer goods has focused on brand acquisition. While its main brand is
Videocon, within India it is also the NBO for Sansui, Akai, Toshiba,
Electrolux, Allwyn, Kelvinator and Hyundai, as well as for its own second
brand, Kenstar. The brands with presences in consumer electronics sectors are
Videocon, Sansui, Toshiba and Akai. Kenstar entered the market for high-end TVs
in 2006, and it uses the other brands in the white goods market. VIL’s
multi-brand strategy is quite different from other companies in India, which
typically operate under single umbrella brands. Regardless, this has given the
company a dominant share of volume sales, which strengthens its hand in negotiations
with retailers. This strategy is under review and may change in 2009, with
brands like Hyundai being axed from the consumer electronics range.
·
In 2008, Videocon reported that
it had been given land in Navi Mumbai for a proposed LCD plant, and it is
likely to begin operating in three years.
The company is expected to continue to reorganise, streamline its brands
and businesses and expand into global markets.
Key Facts
|
Full name
of company:
|
Videocon Industries
Ltd
|
|
Address:
|
Auto Cars
Compound, Adalat Road, Aurangabad, Maharashtra 431005, India
|
|
Tel:
|
(+91) 2431
251501/2/3/4
|
|
Fax:
|
(+91) 2431
251551
|
|
www:
|
www.videoconworld.com
|
|
Activities:
|
Manufacture,
marketing and distribution of consumer electronics products and home
appliances; also oil and gas exploration
|
Source: Euromonitor International from
company reports, Trade press
|
|
2006
|
2007
|
|
Net sales
(Rs million)
|
75,803
|
87,102
|
|
Net profit
(Rs million)
|
8,188
|
8,578
|
Source: Trade press, Company research,
Audited company results,
Note: Figures are for stand-alone
Videocon Industries Ltd
·
VIL was founded by the Dhoot
family. The company was one of India’s leading brands for appliances and white goods
in the 1980s. Videocon International was the flagship company, but the group
had a host of subsidiaries and joint ventures. In 2005, there was a major
restructuring in the organisation and Videocon International merged with
Videocon Industries, which is now the group’s flagship company. The Dhoots
continue to hold the controlling interest.
·
VIL is present in the
television and home audio and cinema markets, as well as in portable audio
market.
·
The company’s new Chairman has
been quoted as saying that Videocon’s workforce will be cut by as much as 50%
in the upcoming restructuring process.
Press reports state that the company has 6,000 staff in the home
appliances business alone.
·
VIL has a strong dealer network
across the country, and it is now also building the retail chain Next.
·
Videocon is on the threshold of
entering the direct-to-home (DTH) broadcasting sector in India. It also has a
finger in the telecom pie, and it has announced that it will spend Rs 8 billion
over the next three years to expand its retail business.
Production
·
Videocon operates eight plants
and uses another fifteen plants located across the country as OEM
suppliers. It is looking to increase its
manufacturing base in India.
·
VIL has made its plant at
Siliguri, West Bengal, into the export hub for its colour TV business. Exports
of finished products are sent mainly to neighbouring countries. The Siliguri
plant went into production in 2006 with an annual production capacity of
100,000 colour TVs.
·
Since its acquisition of Thomson
SA’s manufacturing facilities, VIL now also has a world-wide manufacturing
presence. While these facilities are currently used to manufacture components
or to engage in R&D, VIL is likely to reorganise and streamline their
production.
·
VIL currently manufactures and
distributes other brands, such as Akai, Sansui and Hyundai, in India. It is also selling products under the private
label Next in its retail chain.
·
In 2007-08, VIL exported almost
a half million analogue colour TV sets.
The group also supplied one million small-sized television sets to the
Tamil Nadu government for distribution under the free TV scheme.
|
Product
|
Brand
|
Annual
production
|
|
TV sets and
sub-assemblies
|
Videocon,
Akai, Sansui, Hyundai, Next
|
31 million
|
|
Audio and
other electrical and electronic appliances
|
Videocon,
Akai, Sansui, Hyundai, Next
|
0.4 million
|
Source: Trade press, Company research, Trade
interviews,
Competitive Positioning
·
Videocon is the largest brand
in the Indian consumer electronics sector. It has a strong presence in home
appliances.
·
The company is licensed as an
NBO for other brands, including Akai and Sansui.
·
With a volume share of 2.7% in
2007, VIL ranked sixth in the Indian consumer electronics market. However, its overall share has been shrinking
and is down from a share of 5.6% in 2004. This is due to the company being
dominant for so long in “old technology” subsectors like VCRs, VCD players,
cassette players and analogue TVs.
·
The company is a late entrant
in the race to develop new digital products, such as LCD and plasma TVs, DVD
players and digital audio products. VIL
has had to play catch-up with other well-entrenched brands in these product
categories. The company has just launched its Integra range of digital TVs,
which the company hopes will boost growth.
·
The company is positioned in
the middle of the market, above direct imports, private labels and small
regional brands but below the Korean multinationals and Sony.
·
In 2009, the company is
expected to make a full-fledge entry into DTH services, another high-growth and
competitive subsector in the Indian television market.
|
Product
type
|
Volume share
|
Rank
|
|
TVs and
Projectors
|
17%
|
2
|
|
VCRs and
DVD Players
|
7.6%
|
3
|
|
Home audio
and cinema
|
7.1%
|
2
|
|
Portable
media players
|
8.9%
|
4
|
Source: Euromonitor International
