P. 1
Videocon Project Report

Videocon Project Report

|Views: 1,336|Likes:
Published by rajesh_scribd1984

More info:

Published by: rajesh_scribd1984 on Oct 22, 2010
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as DOCX, PDF, TXT or read online from Scribd
See more
See less





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. 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.

FactorsforSuccess: y 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.

Relationship with Global Majors:

The company¶s integration strategy and global scale has enabled it to supply consumer electronics and . In the long term.18 million to meet these plans. LCD and other flat panel displays. 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 has re-engineered the plant and it now assembles end products such Multinational players are making their presence felt. 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. Plasma.Global majors AB Electrolux and Thompson Electronics have recently acquired stakes in Videocon. y y FuturePlans: Capacity Expansion: Videocon proposes to upgrade the facilities acquired from Thomson SA by adding new product lines including Slim Tube. In its Italian facility. 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.and will source these funds from domestic or international markets at an appropriate time. The company intends to make investments of over EUR 391. the company plans to develop into a global sized vertically integrated entity in the display device segment along with CPT glass manufacturing.

which would ensure a regular off-take of products. a consumer electronics giant. it is planning to increase the number of its retail outlets across the country to facilitate its foray.000 crore and is looking at becoming profitable in coming years. It has oil blocks Australia. Planning to start 500MWpower Plant in Maharashtra: y Videocon Group. The company also plans to start extraction activities in oneof its Brazilian blocks by next year.home appliances products in India to organised retail chains such as Reliance Retail.The company plans to further leverage on this strategy. Pantaloon Retail and international brands such as Wal-Mart Best Buy etc. Videocon is planning to enter the oil extraction business and has received some proposals from foreign players. is planning to set up a 500MW power plant in its . which has earmarked an investment of Rs9. .both domestic and overseas. Brazil. y y Investment Rationale: Videocon to launch mobile services: Videocon Group will launch its mobile services in Mumbai and Chennai by March. y Focused Oil& G as business: The group has a strong presence in the oil exploration business. It is currently involved in exploration activities in various oil blocks. Datacom has now been renamed as Videocon Telecommunication Ltd.Mozambique and Istanbul. The company plans to cover the entire country with its GSM mobile services within the next 18 months.

has discovered More than 90 feet of high-quality net oil pay while drilling the Wahoo-2 or Wahoo North well in the region. It has recently bid for block in Egypt and is also exploring opportunities in the CIS block and other potential countries. owned by a consortium of which Videocon Industries and Bharat Petroleum Corporation (BPCL) are part through their units. y Opportunities in Oil a nd Gas: Videocon plans to expand its activities in the oil and gas sector.The company is also hoping to be successful in the New Expl- . It also expects to achieve financial closure for its Gujarat-based 1.homeland. The financial closure for the first phase of 600MW has been achieved.200MW power plant by end-March. The Wahoo North well is located five miles to the north and down-dip from the original Wahoo discovery well. the second phase¶s financial closure is getting completed. has forayed into mobile handset space. The company is looking into the land availability issue and other issues like coal transportation y Discoveryofhigh-quality net oil pay: The BM-C-30 offshore block in the Campos Basin of Brazil. it plans to achieve a pan-India presence by end of February and roll out 15 more models of handsets in two months in addition to exploring the option of coming out with 3-G handsets. Videoconplans y pan India presence: Leading conglomerate Videocon. which had encountered oil in 2008. Maharashtra.Anadarko also expects to drill two to four additional exploration wells in the Rovuma Basin this year.

Pantaloon Retail and international brands such as Wal-Mart Best .The company is in talks with three French multinational insurance companies for a possible joint venture for the same. an extensive distribution network and strong brand equity it isn well positioned to lead the growth in this industry. 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.oration and Licensing Policy ± V (NELP V) for which it has already submitted bids. Expansion Plans: y Videocon plans to enter the insurance sector.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. a growth area for the Indian economy.The organised retail industry is one of the fastest growing segments in the economy. Large Indian and Multinational players are making their presence felt.The company expects the domestic market to grow at least 20 per cent per annum.The acquisition would also result in deriving value out of synergies from back end due to better cost efficiencies. y Acquisition of D aewooElectronics: The company has been chosen as the preferred bidder to acquire South Korea¶s third largest electronics manufacturer Daewoo Electronics from its creditors.Traditionally consumer durables have grown at least three times the GDP growth rate. The Indian economy is growing at a very healthy rate of over 8 per cent per annum.With the wide product range.

R. Kim (CEO) Products Consumer Electronics Home Appliances Components Office Automation Mobile phones Wireless Internet Petroleum Satellite television Power Revenue US$4 billi n (2010)[1] Nt in m US$276 milli n (2010)[1] Empl s .Buy etc.The company plans to further leverage on this strategy. Type Public(BSE: 511389) Industry Conglomerate Founded 1979 Founder(s) Nandlal Madhavlal Dhoot Headquarters Aurangabad. Maharashtra. India Key people Venugopal Dhoot (Chairman) K. which would ensure a regular off-take of products.

Italy. This concept in the DTH service is relatively new in the presence of other players like ZEE tv's Dishtv. m y Display industryand its components: After the acquisition of Thomson in 2005.5 000 (2010)[1] W bsit Vid n. Telecommunication: Videocon Telecommunication Ltd has license for mobile service operations across India. Videocon launched its DTH product. Videocon Industries: Innovativeness 94. Poland and China and manufactures a range of high-tech products such as slim CPT. extra slim CPT and High Definition 16:9 format CPT. It launched its services on 7 March 2010 inMu m b ai. It has plants in Mexico. Videocon offeredL CD& TVs with built-in DTH satellite receiver with sizes 19" to 32". As a pioneering offer in the Indian DTHm ark et. Air tel Digital Tv and Reliance's BIG TV providing only the set top box. y DT H: In 2009. called 'd2h'.1 Quality & Depth of Management 87.0 Financial Performance . Tata Sky. Videocon has emerged as one of the largest Colour Picture tube manufacturers in the world.

y CHINA: In the Thomson plant located in China the local Chinese Government is the minority shareholder. .0 Quality of Products & Services 83. The Italian central government is giving a euro 180 million grant whereas the regional authorities are giving a 40 million grant. The compounded growth rate is projected to be around 70% in the next few years.0 Global Competitiveness 87.0 Talent Management/People Practices 88.101.0 Total Score 641.0 Ethics & Transparency 101.1 Role of local government in the acquired units: ITALY: y The LCD television segment is one of the fastest in terms of growth rate in Italy. it also gained control of Thomson¶s Mexican plants. y Mexico: When Videocon acquired Thomson¶s CPT business. Videocon would itself pitch in with about euro 300 million whereas bank loans would provide a further 700 million. Videocon in partnership with the local government is going for a Greenfield venture in this segment.

One of the largest and most acknowledged CPT manufacturer in the world . MajorAchievements ofVideocon IndustriesLtd: The largest panel production facility in the world under one roof providing very high economies of scale. LG Electronics India Ltd. LG. Videocon is demanding a 25-30% cash benefits from the authorities who are currently ready to give only about 20%.However Videocon Industries has a view that it would expand in the country only if the government gives it enough incentives. One of the few companies in the world to convert sand to TV. and Sony. has announced its extension plan in 2006. One of the world's largest and most respected CRT glass manufacturers. The company is going to invest $250 million in India by 2011 and is planning to establish a manufacturing . 1YearComparativeGraph: Videocon Industries BSE SENSEX Sector outlook: There has been strong competition between the major MNCs like Samsung. Firing the largest furnace of its kind in the world with a tank size of 3300 sq ft.

VideoconInternational We . and Mexico. Customer. by being a responsible corporate citizen. TCL Corporation is also planning to establish a $22 million manufacturing facility in India. offering high quality consumer durables at affordable prices. y Sustaining Growth : We will be a source of pride to our business associates by ensuring mutual prosperity and growth through the implementation of forward-looking corporate strategies. y Creating Happiness : will bring happiness into every home. spreading the culture of convenience. y We Pursuing Excellence : will provide a conducive environment for enabling our employees to develop their potential and make a significant contribution to the Group's success. aimed at identifying opportunities and responding intelligently to the dynamics of change. In 1985. far and wide. Also.facility in Pune. entertainment and comfort. create products and services that will improve the quality of life. realize the goals of the world community and protect the environment. through a technical tie-up withToshiba Corporation of Japan. with the acquisition of Thomson Displays by Videocon in Poland. the company is marking its international presence. y Achieving Progress : We will pursue innovative technologies in the fields of Electronics and Energy. The Indian companies like Videocon Industries and Onida are also planning to expand. Corporate and Videocon : y Corporate Overview : TheVideocon Group is committed to create a better quality of life for people and furthering the interests of society. Videocon has acquired Electrolux brand in India. China.

the consumer benefits enormously by getting premium products at affordable prices. ensuring quality control and becoming vertically integrated. thereby reducing costs. such as Electronic Tuners. ATDMs and Deflection Yokes. the Company has also undertaken complete backward integration to manufacture all critical and important components of its products. Stereo Radio. Recorders and Personal Stereos. right across the spectrum. Fired by a passion for innovation. At its modern plant at Chitegaon and Aurangabad. Coupled with quality-consciousness at every stage. Videocon has kept pace with the changing face of technology. constantly upgrading its manufacturing facilities to incorporate advanced technology and high standards of quality into its product range. the flagship company of the Videocon Group. It has set up a unit at Gandhinagar in Gujarat for manufacturing Black & White TV picture Tubes. FBTs. Videocon has developed near zero wastage technology which helps reduce manufacturing costs by optimizing material inputs. Black & White TVs and Audio products. The company currently manufactures Colour TVs.Limited launched India's first world class Color Television. Today.. is India's leading manufacturer of Consumer Electronic products. Videocon InternationalLtd. y T he S ound of Excellence: Videocon produces a sophisticated range of Home Audio Systems. as well as the . AMBITI ON S and T ECHNOLOG I ES : y T echnology with a Heart : Committed to giving the consumer the best the world has to offer.

Larger Screen Sizes. when the then Prime Minister of India. has the distinction of having set up India's first plant for the manufacture of Glass Shells for Color Television Picture Tubes. world leader in Glass Shell Technology.. Perceived as an innovator in its field. y F irst with the Best: Continuous upgradation and indigenous manufacturing has been and continues to be an integral part of the company's philosophy.. USA (formerly known as OI-NEG TV Products Inc. Videocon was the first Indian Company to introduce Picture-In-Picture. ANALYSIS AndFINDINGS . It is the first Indian company to win the prestigious CE approval for exporting its Colour TV to Europe. In Colour TVs. Videocon has notched up many exciting firsts. USA). Videocon Narmada Glass (VNG): a division of Videocon International Ltd. Videocon is now a global player. Turbo Sound. Indonesia and South Africa. Global A mbition: y Looking beyond India. The projects in 1990.. the Full Flat Square Tube. the late Shri Rajiv Gandhi.contemporary international range of Kenwood Digital Hi Fi Systems. in technical collaboration with Techneglas Inc. Surround Sound. Europe. Videocon is now entering world market with its operations in the Middle East. Bazooka technology and the Freedom series. acknowledged by the world. laid the foundation stone for the project. by exploring the world's most advanced technologies.

4 0. The CTV Glass Shells manufactured by VNG are at par with international standards and the Color Picture Tubes made with VNG glass have already received VDE approval.6 0. Share Direct ooling Direct ooling Frost Free SUCCESS STORIES: y The Heights of Success VNG has some remarkable achievements to its credit. The facilities include a state-of-the- . y Videocon introduced frost-free refrigerators in 1991. In 2005-06 the market was as follows Segment Price % Market Share Direct Cooling Low 85% Frost Free 35-40% more than DC 15% 0 0.8 1 Price % Mkt.2 0..COMPARISON WITH OTHER COMPANIES REFRIGERATORINDUSTRY AT A GLANCE y Refrigerators are being manufactured inIndia for the last four decades. starting with the successful absorption of sophisticated technology from Techneglas Inc. USA. y Till early nineties only direct cool refrigerators were used in India.

A.1 Consumer Electronics and Home Appliances take shape. VNG has now surpassed the norms of performance guaranteed by the collaborator. to take millions of Indians into a better. with the avowed purpose of producing world-class Colour Television through a technical tie-up with Toshiba Corporation of Japan. Harnessing the advanced technology. 19V and 13V CTV glass parts.200 crores of precious foreign exchange every year. U. Where bushes of cotton bud blooms. time and again. Videocon emerged as India's leading brand of both Colour and Black &White Televisions and continues to dominate this highly competitive market. . Where fields of sugarcane grow tall and proud. relentlessly pursuing quality to achieve variousinternational standards of Quality ControlBreakingthrough. VNG's production has replaced these imports. The leader breaks new ground.with efficiencies exceeding international standards. Techneglas Inc.. where the Dhoot family launched Videocon International Limited in 1984.S. VNG has now developed the 20V 2R the latest models. Where tourists flock to the world-famous caves of Ajanta and Ellora. thereby saving almost Rs. Where India's NO. This is Marathwada. Indian manufacturers of CTV Picture Tubes were importing Glass Shells. and is operating the plant with 150% capacity utilization . y A Picture Perfect Future: Till 1994. Having initially successfully established its 20V. brighter future. India.art Tool Room and Mould Shop to manufacture and maintain its mould requirements. The leader forges ahead. The leader innovates. Within a decade. with innovative products for abetter life.

From in built recording to internet facilities to supreme sound etc. t is envisaged that 100m¼ will be invested in the next 2 years for this purpose 5. AUO.banks. Leverage the strong base of Videocon¶s glass business: . there is today no limit to the number facilities that a television can envision of offering. Since consumers are ready to shell out money for a lavish entertainment experience. CMO. Sharp) Cost Strategy: 1. Consider improvement in production lines set-up: investments. shopping malls. company offices. The opportunity for this industry lies in coming up with new features to the conventional CTV.Expand into LCD panels back-end assembly (from buying LCD arrays from big suppliers like LG.New Product Line Introduce CCTVs as it has the demand in several areas like restaurants. airport. 4. SDI. Improve the furnace output in the Poland Glass factory by making some changes into furnaces including electrical boosting. There is therefore lot of scope for growth and innovation. railways stations.This will reduce manpower and overheads per picture tube by 30% that will be redeployed on new activities in the sites (new technologies) 3. line speed up / mergers? Target is to increase output and decrease product costs by increasing productivity of existing lines 2. hospitals. It has now become an entertainment experience and a lifestyle statement that people are willing to pay for. Consider increasing capacity through one more furnace. Industrial Strategy: 1. ³A lifestyle statement´ People do not see the television as a mere electronic device providing sight & sound.

Thomson-Videocon partnership will have its own base of additional 4 million units CTV (other than India) 3.Wall mounted Flat CTVs at the price of 12. CTVs with inbuilt set top box 6. necessary to make its cost below 1.5% of sales Product Development: 1. 2. Tie up with DTH player and provide annual subscription offer 7. Necessary to rationalize R & D efforts. 8. to provide Direct to home services.990.Aimed at fulfilling needs of customer who can not buy LCDs but prefer to do away with CTV models which occupy space in living rooms. INDUSTRYANALYSIS (REFRIGERATOR INDUSTRY IN INDIA) THREAT OF ENTRY Barriers of entry y Economies of scale: . 5. Bluetooth enabled CTV.Reduce production cost by upgrading and improving the production lines.TVs With hard disk to store programs.900 with exchange offer for an older version. 4. 3. i-TV ± web enabled TV at the price of 13.Thomson-Videocon partnership will have a very strong negotiation position and can reduce impact of glass pricing volatility 2.

Whirlpool. Their brand awareness has grown tremendously after the recent Cricket World Cup Tournament. Videocon and Electrolux have achieved economies of scale.The players like Godrej. y Product differentiation: The companies like Godrej. This will force the entrant to come in at a large scale and risk strong reactions from them or come at a small scale and accept a cost and price disadvantage. BPL and Videocon. The Korean players like LG and Samsung who engaged in heavy advertising and brand promotion during the last year have also created a niche for them in the premium segment. Godrej also possesses economies of vertical integration as it manufactures its own compressors. This declines their unit cost of every function of business and enables them to keep their prices low. BPL . The other players like BPL and Videocon who are currently outsourcing their compressors also plan to set up their own manufacturing units for compressors in the long run. Godrej has a capacity utilization of 75% and the highest capacity in the industry. during which they advertised heavily. which constitutes a substantial part of the manufacturing cost. being very old players in the Indian market enjoy high brand awareness and consumer loyalties. These create a barrier to entry by forcing the entrant to spend heavily to overcome existing consumer loyalties and to build a brand image. These brand names are associated with trust and reliability in the Indian market. Capital Requirements: y .

y Access to the distribution channels: The Indian players like Godrej. inventories and for covering up the start-up losses. Videocon and BPL which are catering to the mass market have a strong distribution and dealer network. promotional allowances. The South Korean Majors like Samsung and LG have a dealer network of more than 1500. Production facilities..Huge Capital requirements are posed in front of the new entrant in terms of advertising. Moreover these companies have established developed ties with the channel members over the period of time. which will reduce the profits. Whirlpool has also developed a strong network of 4000 dealers in urban and semi urban areas in a period of few years. They have a presence in the urban as well as the rural areas. as they know the Indian Market well. y Government policy: The Government policies of . Cost disadvantage independent of scale y Learning or Experience curve: The old players like Godrej. marketing. product development. BPL. Distribution channel credit. This poses a major threat in front of the new entrant as the existing firms already serve the channels and the new entrant will have to persuade the channels to accept its product through high margins. which are hard to break. better credit facilities and advertising support. and distribution and in other areas of business. mainly in urban areas and plan to expand it in rural and semi urban areas also. Videocon are high on the experience curve. This Experience lowers their costs in production. thus giving a cost disadvantage to the new entrant.

VIDEOCON 1. PlanetM. Electrolux.levying duties on the imported Refrigerators and refrigerator parts gives an advantage to the Indian Players and in a way protect them from price competition in the market with the MNCs. Refrigerators 5. PRODUCTS Colour Televisions 2. Philips (TV Products) etc. Kenwood. Kelvinator. Mobiles and many other home appliances. . Washing Machines 3. Kenstar. BPL and Whirlpool. Hyundai. Expected retaliation: The industry as a whole faces excess capacity and the supply exceeds demand and so the existing competitors are expected to respond forcefully to a new entrant. Videocon Group brands include Akai. The new entrant will face competition based on the segment to which it tries to cater y If the company enters in the Direct cool segment Godrej and Whirlpool will pose the major threat. Samsung. high capacity segment (above 300 Ltrs) it will have to face main competition from LG. If the company enters in the Frost free. Microwave ovens 6. Next. Air Conditioners 4. Sansui. selling them through a Multi-Brand strategy with the largest sales and service network in India . Toshibha.

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->