ideocon

Experience Change -
The Indian Multinational Way
●
● Bhagyashri
Bhagyashri Shrikhande
Shrikhande

●
● Shamila
Shamila Saldanha
Saldanha

●
● Ankita
Ankita Parab
Parab

●
● Amitvikram
Amitvikram Toraskar
Toraskar

●
● Prathamesh
Prathamesh Raikar
Raikar

●
● Ashish
Ashish Vhatkar
Vhatkar
 Vision & Mission
A reflection of continuity and change

“To delight and deliver beyond expectation through

ingenious strategy, intrepid entrepreneurship,
improved technology, innovative products,
insightful marketing and inspired thinking about
the future.”

Experience Change
Reflection of Continuity & Change
The End:
“To delight and deliver beyond expectation...”

The Means:
“...through ingenious strategy...”
”...intrepid entrepreneurship...”
“...improved technology...”
“...innovative products...”
“...insightful marketing...”
“...inspired thinking about the future.”
 Corporate Profile
1. Consumer electronics, home appliances &

compressor manufacturing

2. Display industry and its components

3. Colour Picture Tube glass

4. Oil and Gas

 Returning its dues to Society

• Corporate Governance

• Philosophy and Resolve

 Returning its dues to Society
The road leading to Mission 2010

• Corporate Governance

• Philosophy and Resolve

The road leading to Mission 2010

Joint Ventures and Mergers and
Rebranding
Alliances Acquisitions
JOINT VENTURES AND ALLIANCES

• For Consumer Electronics

– Akai - Videocon
– Sansui - Videocon
– Toshiba - Videocon
MERGERS & ACQUISITIONS

2005200520052008
Thompson
Amalgamatio
Electrolux
Merging of
SA CPT
n VIL=VI
AB's
group brand
 THOMSON SA CPT ACQUISITION
• Videocon acquired the Color Picture Tube (CPT) businesses
Thomson S.A

• Transfer of 4 major manufacturing sites and related R&D

– Poland
– China full-fledged R & D at EUROPE(Agnani) & china
– Mexico

• Patents &IPRs relating to the most basic technologies in CPT

segment
 VIDEOCON PRESEPECTIVE
Thomson= demand in developed markets
• CPT
Videocon=opportunity in emerging market

• Anagni unit =European hub

• Strong comeback
 Transaction Structure
Cash Consideration
€ 240 million

Poland

Thomson China Videocon

Mexico

€ 15 million Videocon Industries

(Oil & Gas)

Investment Thomson to hold

Videocon International c.14% of each
(Consumer Products)
€ 225 million
 REASONS BEHIND THIS ACQUISITION

• Vertical Integration
• Cost cutting
• Rationalization of Product Profile
• Global presence &strong customer base
• Access to over 2,000 patents
– Way to lunch a new product
 AMALGAMATION OF VIL &VI
• Advice given by the development bank of Singapore and ICICI

• Market capitalisation =Rs 9,600 crore

• Share swap ratio = 5:1

• Synergies
– Larger asset base as a consolidated entity
– Help in various expansion plan
– Front-runner = Purchase Electrolux Kelvinator
 STRATEGIC PARTNERSHIP
VIDEOCON=AB Electrolux

●
AB Electrolux

Invested 94 mn in VI group
 BENEFITS
• Domestic +International Alliances

• Separate license agreement

– Right to use 2 brands
• Electrolux=5 Year
• Kelvinator=25 year
– Distribute &market products
• Electrolux, Kelvinator, Allwyn = India & SAARC countries
– Strict criteria
• Design
• Quality
• Product offering
 BENEFITS
• Electrolux’s manufacturing plants
– Shahjanpur (Rajasthan)
– Warora (Maharashtra)
– Butibori (Maharashtra).
• Achieved trade turnover =Rs 6,000 crore annually
• Major original equipment (OE) supplier for
Electrolux’s
 Domestic
+
Overseas Oil &

MERGING GROUP
Gas ventures.

VIDEOCON GROUP
MULTI BRAND
 Sales/Income/Expenditure
10000
9000
8000
7000
6000
Sales
5000 Income
4000 Expenditure
3000
2000
1000
0
2004 2004-05 2008
 Equity Debt
9000
7000
8000
6000
7000
5000 6000
4000 5000

3000 4000

2000 3000

2000
1000
1000
0
0
05
06
04

07
08
20
20
20

20
20

04
05
06
07
08
-1000
20
20
20
20
20
Reserves Share Capital Debt
 Sales /Income/ Expenditure
3000

2500

2000
Sales
1500 Income
Expenditure
1000

500

0
Sep'08 Dec'08 Mar'09 Jun'09
 Cash and Bank Balance
1400
1200
1000
800
600
400
200
0
2004
2005
2006
2007
2008
100%
90%
80%
70%
60%
50%
40% Dividend Payout Ratio
Ploughback Ratio
30%
20%
10%
0%
2004
2005
2006
2007
2008
 Asset Turnover / ROA
5000
4500 0.76/6.81
0.80/7.38 0.66/6.04
4000
3500 0.79/4.87

3000
2500
Current Assets
2000 Fixed Assets
1500
1000 0.15/-0.77
500
0
2004 2005 2006 2007 2008
30

25

20

15
10 Operating Profit Margin
Net Profit Margin
5 Cash Profit Margin
0
2004 2005 2006 2007 2008
-5

-10

-15
 ROCE
2008

2007

2006
ROCE

2005

2004

0 2 4 6 8 10 12 14
 2005 2009

15.77%
22.14%

6.09%
70.30%
73.83 %

Promoter's holding
Mutual Funds and UTI/FI Promoter's holding
FIIs Mutual Funds and UTI/FI
Private Corporate Bodies FIIs
Indian Public Private Corporate Bodies
NRI / OCBs Indian Public
Custodians (GDR)
 Videocon
35
30
25
20
15
10
5
0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan'04 Feb Mar
Market(NSE)
2000

1600

1200

800

400

0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan'04 Feb Mar
 Videocon
500
400
300
200
100
0
'r 04 y'04 n'04 l'04 g'04 p'04 t'04 v'04 c'04 n'05 b'05 r'05 r'05 y'05 n'05 l'05 g'05 p'05 t'05
u c a u c
Ap Ma Ju J Au Se O No De Ja Fe M Ap Ma Ju J Au Se O
Market (NSE)
3000
2500
2000
1500
1000
500
0
r'04 y'04 n'04 l'04 g'04 p'04 t'04 v'04 c'04 n'05 b'05 r'05 r'05 y'05 n'05 l'05 g'05 p'05 t'05
p u c a u c
A Ma Ju J Au Se O No De Ja Fe M Ap Ma Ju J Au Se O
 Videocon
300
250
200
150
100
50
0
Oct'08 Nov'08 Dec'08 Jan'09 Feb'09 Mar'09 Apr'09 May'09 Jun'09 Jul'09 Aug'09 Sep'09
Market (NSE)
6000
5000
4000
3000
2000
1000
0
Oct'08 Nov'08 Dec'08 Jan'09 Feb'09 Mar'09 Apr'09 May'09 Jun'09 Jul'09 Aug'09 Sep'09
2003-04 Systemati2004-05
c Risk
1%
Systematic
Risk
32%
Unsystema
tic risk Unsystem
68% atic risk
99%
2008-09

Unsystemati
c risk
Systematic
42% Risk
58%
 EPS
50
9

40 8
7
30 6
5
20
4
10 3
2
0
2004 2005 2006 2007 2008 1

-10 0
Sep/08 Dec/08 Mar/09 Jun/09
HUMAN RESOURCE
 Vision
“To be able to bring best in class practices and
services to employees so that we attract,
recruit, retain and grow people capabilities for
business growth”

• Way to Go
 Focus on organization building
 Focus on appropriate org structure and design
 Integrating Learning and Development
ORGANIZATIONAL
STRUCTURE
 STORE
DEPARTMENT
Functions:
1. Purchase of all items
indented by user functions
like spares Consumables
etc., other than plant and
equipment.
2. Registration of suppliers
and evaluation.
3. Maintenance of Stores.
4. Inventory control of stock
items.
5. Co-ordination with
finance department for
timely payment to the
Suppliers. 
 FINANCE
DEPARTMENT
Functions:
1. To comply with legal and
other requirement.
2. To provide information for
stakeholders about financial
performance and viability
3. To provide managers with
information for decision-
making
4. To provide a structure to
business activity based on the
careful processing of
numerical data.
 MARKETING
DEPARTMENT
1. The smooth functioning of the
Functions:

marketing, sales and delivery

operation
2. Corrective actions on
customer complaints
3. New initiatives taken for sales
maximization of the company
4. Handling relationship with
personal, communicating and
reporting to the management.
5. Developing sales programs
and formulating and designing
sales polices.
 Succession planning

• To identified and develop talented employees

• Helps to “Build Bench strength”

• Helps in retention of the superior employees

• Grooms firm for success.

 Steps in Succession planning

1. Pre Plan

2. Identify leadership characteristics

3. Assess bench strength

 1.Pre Plan
• Primary Data

1. Through questionnaire
 Subordinates of the successor
 Peers of the successor
 Immediate Boss (which is HOD in this case)
 Self questionnaire (He will rate himself)

2. Through interviews
 Interviews of the HOD
 Interviews of employees of the HR dept
• Secondary Data
 Performance appraisal and data
 Peer and management recommendations
 Outside assessment center’s data

• Secondary Data from the HR Dept

 Competency mapping
 Job description
 Policies of the organization
 PERFORMANCE ANALYSIS MODEL

WORKHORSES RISING STARS

DEADWOOD PROBLEM CHILDREN

WORK
PERFORMANCE

POTENTIAL
2.Identify leadership characteristics
 Competency manual

No. Competency Definition

1 Interpersonal skills Ability to gain trust and confidence
of others interacting in a fair and
honest manner.
2 Decisiveness Ability to take the decision which
the available information.
3 Proactive and forward thinking Ability to think ahead and influence
events and take initiatives.
4 Team Leadership Ability to obtain quality products by
optimal utilization of team talent.
5 Vision Ability to identify or describe
organization goal and align others
towards its accomplishments.
6 Communication Skills Ability to listen to others and explain
oneself clearly.
 BUSINESS INNOVATION
DEPARTMENT
• Qualification Required: - B.E. and MBA
• Experience Required: - Minimum 15 years
• Industry: - Preferably same
• Technical Skills Required: - MS Office, SAP, Six sigma,
kaizen, Business innovation, training co-ordination.

• Soft Skills Required:- Leadership skills, communication

skills, motivation, inter personal skills, result oriented,
team leadership, proactive and forward thinking, problem
solving, Business knowledge, vision, empowerment, etc.
 3.Assess bench strength

Sr. Requirements For HOD position Mr. X Mr. Y

No.
1 Qualification B.E. with commercial B.E. (EXTC) B.COM
knowledge
2 Require Above 10 yrs 2.2 yrs 8yrs
Experience
3 Personal Strengths Strengths Strength
Information -Leadership skill -Inter personal -Leadership skill
-Communication skill skills -Communication skill
-Motivation -Communication skill -Motivation
-Inter personal
skills
 Role of HR in M&A
• Integrator

• Listener’s Style of Leadership

• Empathetic attachment

• Involvement by showing responsibilities and

brighter prospects
 Initially

Employees were
Attrition rate
losing faith on
went up to 80%
this merger
  
CORPORATE SOCIAL RESPOSIBILITY

• Energy Conservation

• Schools

• Charities

• Sports

• Hospital
 Why Videocon ???

• Creativity and autonomy

• Emphasis on competence
• Equal opportunities
• Long-term perspective
• Training
• Rewards
 VIDEOCON
OPERATIONS
 Videocon – A Global Player through
OEM route
• Acquisition of Thomson’s CPT manufacturing
business
 Manufacturing plants in Poland, Mexico, China
and Italy
 R&D facility in Agnani, Italy
• Takeover of EKL

 Three manufacturing facilities in India

 Shahjahanpur in Rajasthan, Warora and
Butibori in Maharashtra
MANUFACTURING, R&D CENTRES
• China plant feeds the Asian, Mexico the
American markets

• Poland caters the European markets

 Contract Manufacturing
• Videocon makes CTVs for Onida at its Gujarat
unit

• China-based CE manufacturer TCL

• Design and manufacture for Hyundai

Electronics
Ravva oil field off the coast of Andhra Pradesh
• One of the lowest operating costs in the world

• Reserves of over 250 mn barrels

• Produces 50,000 barrels of oil per day

• ONGC-Cairn-Videocon joint venture to drill 5 in-fill wells

• Resulted in an incremental oil production of 18.5 million

barrels

• Assigned exploration blocks in Australia, Oman with

world leaders in oil and gas.
 Videocon Logistics
• Entered into a tie-up with Auto Cars—an
independent logistics services firm
• Handles logistics in 3 phases:
1. Factory to warehouses
2. Warehouses to dealers
3. W/H to retail stores “Next” & “Planet M”
• Reduce inventory levels for Videocon
consumer durables and home appliances
from 21 days to 10-12 days

• Expand number of warehouses from 28 to 65

cities to spread logistics operations from
urban to semi-urban markets
 Videocon joint venture with
Japanese firms Mitsui and Hitachi

• Ultimate aim of the JV: cost centre to a

business centre in itself and offer expertise to
third parties
 Comparison of supply chain strategies

BPL channel

COMPANY

DISTIBUTOR
COMPANY Godrej
channel

DISTRIBUTOR

DEALERS
DEALERS

CUSTOMER
 Videocon and Samsung
COMPANY channel

C & F AGENT

DISTRIBUTOR

DEALERS
DEALERS

CUSTOMER
 C & F Agent

• Reputation in terms of service management

• Places order with the Company 30 days in advance
• Assists the company in marketing support activities
• Maintain proper sales records.
• Oversees the activities of the company staff &
informs on abnormalities, if any.
• Provides proper feed back for the marketing
activities in his territory
 Videocon Distribution strategy

• Videocon - Future group tie-up

E-Zone and Electronics Bazaar

• More volume, higher visibility to Videocon

• Higher footfall, value addition in the form of a

new product line for Future group.
• Strategic advantage to both

 Elimination of middle men and better supply

chain efficiencies
 Videocon saved a lot by avoiding expenditure
on its retail chain
 Better prices for consumers
Strategic group mapping of industry players
BPR
Restructuring/Re-engineering by
Mr Kim

• Employee trek

• Videocon Global, wholly-owned by the flagship group

company Videocon Industries

• No separate sales head

• The PGH would be responsible for all the brands

under the product category
• Improving efficiencies

• International market
• 1.6bn/ 2.5 bn comes in from the domestic market.

• Shift and scale up R&D from Aurangabad to Mumbai

or Delhi

• Centralize operations for better control

• Investments in global technology and R&D

• Brand Strategy
 Axe non-performing brands – Hyundai, Akai
 Launch new brands in the upper end of the
segment
 Videocon Telecom
• Mobile handset manufacturing
 Has the ability to churn out 1 million units per annum

• Subsidiary named Datacom Solutions Pvt Ltd

 Datacom has obtained licences for providing GSM
services in 22 circles across the country
 Expected to launch service in December 2009
 Plan to build a subscriber base of around 10 million in
three-four years of launch.
 DTH Statistics

• Total number of television households is 125

million, growing at 12-15%

• The DTH subscriber base currently a little over

6 million

• Expected to touch 15 million by 2010

 6th DTH player

2,500 dealers across India

Videocon DTH plans :

• 15 lakh subscribers in the first year
• 1 Crore subscribers in 6 years
Videocon-on-Wheels (VOW)

Chief guest Ms. Sayali Bhagat

• Videocon-on-Wheels (VOW)— ”Service At
Your Doorstep”

• Service centres are opened every 300 km

along with six mobile service vans

• PoP materials provided to all Videocon dealers

 Videocon´s service network
• Includes 100+ mobile vans
• 500 authorized service centres
• Call centres at 30 strategic locations across the
country
• 1,000 service engineers
• >100 spare-parts dealers, while efforts are on
to further expand this network.
Experience Change
 Changing Trends and patterns…….

‘Technology for health and pleasure’

‘Bring Home the Leader’
‘New Improved Life’
‘Whatever role life gives you, play it big’
‘The Indian Multinational’
‘Eco Logic for sustainable life’

Electronics Energy
 Gain Green Marketing Edge…….

• Command an eco edge over competitors

• “Green-conscious individual are more likely

than other consumers to recommend a brand
and remain loyal to it” – Forrester Research
survey

• Deepen Customer Relationship and Hold them

 Heart of new Brand Identity

Creative Front

Prasoon Joshi, executive

chairman, McCann
Worldgroup India
 Logo Logic

Energy
Youth
Consumer-centric
approach of the
brand and its
positioning to be Eco
Friendly
closer to the
consumers heart -
both in terms of
its values and
philosophies, as
well as its
servicing aspects
Refreshingly
Freshness
Rebranding Elements

Continui
ty

Well -
Launched
 Industrial Analysis

Threats of Potential Entrants

Intense Rivalry Market Stage
Competitors Product Differentiation
Product Differentiation Economies of Scale
Resource Blocking Low Brand identity
Exit Barriers High Distribution channel
Entry Barriers
Bargaining Power of
Buyer
Bargaining Power of
Buyer
Suppler
Concentration
Concentration of
No of Sellers
suppliers Threat of Substitute
Buyers Switching
No of suppliers Negligible
Cost
Switching Cost
Price Sensitivity
Threat of Forward
Threat of
Integration
Backward
Integration
High Definition range
Home Appliances
 Consumer Electronics Pricing

LCD SAMSUNG SONY LG VIDEOCON

32” 31-35000 35-43000 31-33000 26-39000

26” 22000 26000 21000 22000

FLAT SAMSUNG SONY LG VIDEOCON

29” 13-18000 16-25000 11-16000 15-24000

21” 8-15000 9-13000 7-15000 6-12000

Strategic Alliances and Acquisitions
• On a Global scale will give an edge in low cost,
low tech, High volume CPT market.
• Sourcing contracts from partners such as AB
Electrolux will boost manufacturing volume
reducing cost.
– Akai-Videocon
– Sansui-Videocon
– Toshiba-Videocon
 Competitive Advantage
• Videocon has the largest distributed manufacturing base
across India - 12 facilities. (As Compared to LG's two,
Samsung ' has one, and Onida's two)
• Ample experience in managing a complex supply chain.
• Its backward integration (makes circuit boards, shells for its
TVs).
• Wide product portfolio complements each other giving us
an edge in terms of marketing, logistics, manufacturing etc.
It is because of this bigness ('Bada Hai Toh Behtar Hai') that
they are India's largest consumer electronics and home
appliances company.
 Wings Spread Globally
• INDIA

• OMAN

• UAE

• RUSSIA

• BANGLADESH

• CHINA

• ITALY
Sponsorships
Official Partners
Analysis
 Strengths
• Largest Distributed capacity with 17 facilities and plant in
china, Poland, Itally, Mexico.
• Tie up with the Matsushita electric company of Japan add
to the goodwill of Videocon
• Strong backward integration
• 3rd largest picture tube manufacture in India
• Manufacturing advantages based on mass production and
integration process
• Multi brand strategy
• One of the most extensive sales and distribution network.
 Weaknesses
• No exclusive show rooms
• Less investment on advertisement of
Videocon CTV
• Popularity more in Domestic market
• CRT technology is losing popularity
• less focus on unconventional channel
• Fewer margins to the distributor/dealer
• Weak promotional strategy of CTV.
 Opportunities
• Increase in Penetration
• To outperform in domestic market
• Mergers joint venture of strategic alliances.
• Electrolux deal gives licensing rights to sell global brand
(Electrolux, Kelvinator, and Allwyn).
• 2000 patents of Thomson into Videocon's kitty.
• Global presence in countries like Italy, Sudan, Jordan, Poland,
China, Mexico, Oman, South Africa, China.
• It started out as OEM players - first in the domestic market, and
then abroad. This strategy helped them strengthen their
manufacturing and gain economies of scale.
• Industry at a growing phase and diversification possible
• Entry in New ventures like Telecom and D2 H
 Threats
• Brand loyalty is more of LG &other company.
• Brand reputation is not good.
• Increased trade barrier.
• Entrance of global competitor like china.
• Rapid adoption of LCD technologies can kill
CPT market in 10-15 years.
New Ventures….
 Future Plans
• Now eyeing to acquire Swedish giant AB
Electrolux's
• Penetrate deeper into the Indian market
• To strengthen and maintain & its leadership
status