VIDEOCON
INDUSTRIES
LIMITED
Company Background
Videocon Industries was incorporated in 1986.
The company has two core activities, which include
the manufacturing, assembly, marketing and
distribution of consumer electronics and home
appliances, and exploration and production of oil
and gas.The company presently has seven operating
business divisions, in which major divisions are
consumer electronics, home appliances,
components, etc.
In India,Videocon has eleven manufacturing
facilities.The manufacturing facilities produce a
complete range of consumer electronics, home
appliances and critical components such as
compressors, etc. It is the only manufacturer
of glass panels in India.The facility at Bharuch is
largest in the world at a single location and the
third largest overall.
Videocon is one of the major CRT manufacturers
globally, with plants in Poland, China and Mexico.
The Poland plant also produces glass shells. It
assembles air conditioners in Oman and CTV’s
in Italy.
The company has emerged as one of the largest
colour picture tube (CPT) manufacturer in the
world after the acquisition of Thomson's CPT
business, and expects this to grow its international
sales to EUR 782.36 million within three years.
Videocon started its oil and gas division a few years
ago, and presently holds a 25 per cent stake in the
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Ravva oil field, located on the Krishna-Godavari
basin.The operating cost of the Ravva oil field
is supposed to be the lowest in the world, at less
than EUR 0.78 per barrel of oil. Internationally,
it has interests in oil blocks, one in Oman, two in
Australia and one in Timor Sea near Indonesia.
It is an ISO 14001 and OHSAS 18001 certified
company and has received the CE approval for
exports to the EU. It has also been certified by
the VDE Testing and Certification Institute and
corresponds with British standards as well.The
company believes that its strategy of end to end
supply chain integration with global scale and low
cost base and with entry into the global brand
space through the acquisition route will transform
it into a global CE & HA powerhouse with a strong
cash flow from the oil and gas business.
The company registered sales of EUR 1,031 million
in the financial year ended 30th September 2005,
while its sales for the nine months ended 30th June
2006 were reported to be EUR 956.5 million.
Videocon Industries in the EU
Videocon Industries in Poland
Videocon has a manufacturing plant for CPT in
Poland.The plant manufactures all components in the
value chain, including glass, electron guns and yokes.
It has an annual production capacity of
approximately 5.4 million CPT’s and around 4
million glass shells. It employs approximately 4100
personnel.The plant caters to the Turkish market,
Western and Eastern Europe
(including TV assemblers such as Beko and Vestel)
as well as the Russian market.
Videocon Industries in Italy
Videocon acquired Thomson’s CPT plant in Italy
in January 2005.This facility has been re-engineered
for end product assembly and employs
approximately 1400 personnel.The company has
deployed an assembly line for CRT, LCD and PDP
TVs, with assembly of ACs and manufacturing of
PDP panels expected to begin thereafter.The
company also plans to set up units for packing
boxes, thermacol, injection moulding and painting.
Factors for Success
Synergy with Eastern Europe
The strategic acquisition of a manufacturing facility
in Poland has provided Videocon with a fully
integrated facility as well as experienced
manpower. Being cheaper than other EU nations,
Poland also acts as a low cost manufacturing base
for the company in the EU.
An additional benefit accruing to the company
is the scope offered by the Poland plant for
expansion into other areas.The company plans to
optimise its glass sourcing by expanding the plant
capacity as well as by using the synergies with
other glass factories of Videocon, so that it can
be at par with the tube capacity.
Focus on R&D
R&D is an ongoing process for Videocon, due
to the rapid obsolescence of technologies and
products witnessed in this industry.The company
has three product development centres located
at China, India & Italy. It has recently applied for a
patent for a low cost production process for the
plasma panel manufacturing. In the LCD space,
the company have signed a patent assignment
agreement covering 70 patents with a major US
corporation.
Company’s Bharuch plant has a proprietary cost
saving process along with various innovative
measures to increase the efficiency and lower the
operating costs at the glass furnace. It also has the
technology to produce slim and super slim tubes.
It has been able to keep a track of consumer needs
and continuously upgrade the products with
innovative consumer friendly features.
Relationship with Global Majors
Global majors AB Electrolux and Thompson
Electronics have recently acquired stakes in
Videocon, their nominees are on the Board of
Videocon Industries and the resultant experience
and expertise of these companies should help it
in capturing a significant share of global markets
including the EU.
Future Plans
Capacity Expansion
Videocon proposes to upgrade the facilities
acquired from Thomson SA by adding new product
lines including Slim Tube, Plasma, LCD and other flat
panel displays. In the long term, the company plans
to develop into a global sized vertically integrated
entity in the display device segment along with CPT
glass manufacturing.This acquisition is in tandem
with an increase in its domestic CPT manufacturing
capacity to 24 million pieces per annum (presently
17 million pieces) as well as additional capacity of
five million pieces per annum from the alliance with
BPL and JCT. It will help the Videocon Group to
transform into one of the largest players in the
world in integrated manufacturing of CPTs with
CPT glass.The company intends to make investments
of over EUR 391.18 million to meet these plans,
and will source these funds from domestic or
international markets at an appropriate time.
In its Italian facility, the company has re-engineered
the plant and it now assembles end products such
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 as CTVs for the EU market. It is in the process of
setting up an air conditioner assembly line and a
plasma panel assembly line to cater to the growing
demand of FPD TV’s from the EU region.
Opportunities in Oil and Gas
Videocon plans to expand its activities in the oil
and gas sector. It has recently bid for block in Egypt
and is also exploring opportunities in the CIS block
and other potential countries.The company is also
hoping to be successful in the New Exploration and
Licensing Policy – V (NELP V) for which it has
already submitted bids.
Multinational players are making their presence felt.
The company’s integration strategy and global scale
has enabled it to supply consumer electronics and
home appliances products in India to organised
retail chains such as Reliance Retail, Pantaloon
Retail and international brands such as Wal-Mart
Best Buy etc. which would ensure a regular off-take
of products.The company plans to further leverage
on this strategy.
www.videoconworld.com

Acquisition of Daewoo Electronics

The company has been chosen as the preferred
bidder to acquire South Korea’s third largest
electronics manufacturer Daewoo Electronics from
its creditors, who presently hold 97 per cent of
the company.This acquisition would allow it to
strengthen its presence in key markets including
the US, Korea, Japan and the EU.The acquisition
would also result in deriving value out of synergies
from back end due to better cost efficiencies.

Expansion Plans
Videocon plans to enter the insurance sector, a
growth area for the Indian economy.The company
is in talks with three French multinational insurance
companies for a possible joint venture for the
same.

The Indian economy is growing at a very healthy

rate of over 8 per cent per annum.Traditionally
consumer durables have grown at least three times
the GDP growth rate.The company expects the
domestic market to grow at least 20 per cent per
annum.With the wide product range, an extensive
distribution network and strong brand equity it is
well positioned to lead the growth in this industry.

The organised retail industry is one of the fastest

growing segments in the economy. Large Indian and
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