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

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

130

Future Plans Capacity Expansion Videocon proposes to upgrade the facilities acquired from Thomson SA by adding new product lines including Slim Tube. due to the rapid obsolescence of technologies and products witnessed in this industry.The company has deployed an assembly line for CRT.This facility has been re-engineered for end product assembly and employs approximately 1400 personnel.18 million to meet these plans. 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. Relationship with Global Majors Global majors AB Electrolux and Thompson Electronics have recently acquired stakes in Videocon. injection moulding and painting. Being cheaper than other EU nations. In the LCD space. India & Italy. and will source these funds from domestic or international markets at an appropriate time. It has been able to keep a track of consumer needs and continuously upgrade the products with innovative consumer friendly features. Videocon Industries in Italy Videocon acquired Thomson’s CPT plant in Italy in January 2005. Poland also acts as a low cost manufacturing base for the company in the EU. LCD and PDP TVs. An additional benefit accruing to the company is the scope offered by the Poland plant for expansion into other areas. 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 plans to optimise its glass sourcing by expanding the plant capacity as well as by using the synergies with other glass factories of Videocon. the company plans to develop into a global sized vertically integrated entity in the display device segment along with CPT glass manufacturing. the company has re-engineered the plant and it now assembles end products such 131 . Focus on R&D R&D is an ongoing process for Videocon.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. In the long term. thermacol. It also has the technology to produce slim and super slim tubes. It has recently applied for a patent for a low cost production process for the plasma panel manufacturing. 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. 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.The company has three product development centres located at China.(including TV assemblers such as Beko and Vestel) as well as the Russian market. so that it can be at par with the tube capacity. LCD and other flat panel displays.The company also plans to set up units for packing boxes. Plasma. In its Italian facility.The company intends to make investments of over EUR 391. with assembly of ACs and manufacturing of PDP panels expected to begin thereafter.

The acquisition would also result in deriving value out of synergies from back end due to better cost efficiencies. 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. Japan and the EU. which would ensure a regular off-take of products.The company plans to further leverage on this strategy.as CTVs for the EU market. who presently hold 97 per cent of the company. Opportunities in Oil and Gas Videocon plans to expand its activities in the oil and gas sector. Expansion Plans Videocon plans to enter the insurance sector.This acquisition would allow it to strengthen its presence in key markets including the US.Traditionally consumer durables have grown at least three times the GDP growth rate.With the wide product range. a growth area for the Indian economy.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. Pantaloon Retail and international brands such as Wal-Mart Best Buy etc. an extensive distribution network and strong brand equity it is well positioned to lead the growth in this industry. 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. 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. The Indian economy is growing at a very healthy rate of over 8 per cent per annum.The company expects the domestic market to grow at least 20 per cent per annum. It has recently bid for block in Egypt and is also exploring opportunities in the CIS block and other potential countries. The organised retail industry is one of the fastest growing segments in the economy.com 132 . www.videoconworld.The company is in talks with three French multinational insurance companies for a possible joint venture for the same. Large Indian and Multinational players are making their presence felt. Korea.

Sign up to vote on this title
UsefulNot useful