ICRA 200302consumerelectronics

CONSUMER DURABLES
ICRA Sector Research

Consumer Electronics
February 2003
Industry Comment
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Industry Comment Consumer Electronics
CONTENTS
INDI AN CONSUMER ELECTRONICS

CONTENTS .......................................................................................................................................................... 1
TELEVISION PRODUCTS ................................................................................................................................ 2

OVERVIEW .......................................................................................................................................................... 2
BLACK & WHITE TELEVISIONS ........................................................................................................................... 2
COLOUR TELEVISIONS ......................................................................................................................................... 6
VIDEO EQUIPMENT ....................................................................................................................................... 20
VIDEO CASSETTE RECORDERS........................................................................................................................... 20
VIDEO COMPACT DISC PLAYERS ....................................................................................................................... 21
DIGITAL VIDEO DISC/DIGITAL VERSATILE DISC PLAYERS................................................................................ 23
DIGITAL VIDEO RECORDERS ............................................................................................................................. 25
HOME THEATRE ................................................................................................................................................ 25
AUDIO PRODUCTS .......................................................................................................................................... 26
DOMESTIC MARKET .......................................................................................................................................... 26
SUPPLY CHARACTERISTICS ............................................................................................................................... 27
MAJOR ELECTRONIC COMPONENTS ...................................................................................................... 31
B&W TELEVISIONS ........................................................................................................................................... 31
COLOUR TELEVISIONS ....................................................................................................................................... 32
AUDIO EQUIPMENT............................................................................................................................................ 34
OTHER RAW MATERIALS .................................................................................................................................... 34
ECONOMICS—CONSUMER ELECTRONICS ............................................................................................ 34
PROSPECTS....................................................................................................................................................... 41
Analyst: Vineet Nigam

Dated: February 2003
ICRA Information Services www.icraindia.com Page 1 of 44

TELEVI SI ON PRODUCTS
Overview
The television industry started in India in 1970 with the production of black and white (B&W) television sets.
The initial B&W TVs were all 20-inch (or 51-cm) sets. For 13 years, this was the only size offered in the
B&W TV market, till 14-inch TVs were launched in 1984. During the 1970s, the B&W TV market (viz., 20-
inch B&W TVs) grew at a CAGR of over 38%.
A notable development was the launch of the 14-inch B&W TVs in 1984, which evoked an even better
response from the market, especially since they were affordable for households in the lower economic
strata, in both rural and urban areas. In the first five years, the 14-inch market grew at a CAGR of more
than 72%. The advent of the 14-inch product, coupled with the advent of colour televisions (CTVs) in 1982
sounded the death knell for the 20-inch B&W TV. From the late 1980s, the growth in the B&W TV market
was fuelled mainly by the growth in the 14-inch segment.
The birth of CTV in India can be traced to the Asian Games (ASIAD) held in New Delhi in 1982. The
Government encouraged this sector, and various State Governments came up with their own TV
companies like Uptron, Keltron and Meltron. Older players in the B&W TV market, like Weston, Dyanora
and Televista, also diversified into CTVs. By 1989, there were around 200 players in the market.
Unlike in the case of B&W TVs, the Government realised the importance of economies of scale and
stipulated a minimum investment level for CTVs. However, because of the absence of domestic capacity in
picture tubes, TVs were highly import-sensitive items and entailed a huge foreign exchange outgo every
year. The Government tried to compensate for this by raising the excise duties. This led to an all-round
increase in the cost of production, which when transferred to consumers, resulted in a drop in demand.
Thus, after the initial growth phase in the late 1980s, there was a brief lull. The early 1990s, therefore, saw
many TV companies closing shop.
The second phase of CTV growth came on the heels of the 1991-initiated economic liberalisation
programme, after which there was a reduction in both excise and import duties. Simultaneously, with the
opening up of Indian skies to foreign satellite channels in 1991-92 and the coming of cable TV, the demand
for TVs grew further. This was also the period when private and more aggressive domestic players like
Videocon, BPL and Mirc Electronics consolidated their presence in the CTV market through their focus on
both product promotion and technology—the latter through collaborations with international bigwigs (BPL
with Sanyo, Japan, Mirc Electronics with JVC, Japan, and Videocon with National, Japan).
The second half of the 1990s saw the entry of the first bunch of global brands like Akai, Aiwa, Sansui and
Toshiba through strategic tie-ups with the established Indian players. At present, the Akai, Sansui and
Toshiba brands are marketed by Videocon (Akai was initially with Baron International, and later sold to
Videocon). Aiwa is now a subsidiary of Sony. The other multinationals (including Sony, LG, Samsung)
entered on their own and quickly captured the imagination of the market with innovations in product quality
and features.
Black & White Televisions

The B&W TV industry, which started in India in 1970, has a size of around Rs. 9 billion (in value terms).
! Market Size
The B&W TV market in India had a size of around 3.8 million units in CY2001, compared with 4.7 million
units per annum in CY2000, and around 5.4 million units in 1999. Of late, the market has started shrinking,
owing to the increasing preference for CTVs and the development of a big second-hand CTV market.

Figure 1: Trend in Domestic B&W TV Market Size
6.5 million units

6.0 6.0 5.9
5.5 5.2 5.4
4.7
4.5
3.6 3.8
3.5 3.4
2.5
1.5
0.5
1990 1992 1994 1996 1997 1998 1999 2000 2001
Compiled by ICRA Information Services
During the early 1990s, in spite of the onslaught of CTVs, the B&W TV market grew from a level of 3.4
million in 1992 to 6 million in 1997, at a CAGR of 12%. Although the 1990s started off with the market
showing signs of shrinking, the demand was reinvigorated from 1994 onwards, mainly because of the
exemption of excise duty on B&W TVs (there were other reasons as well). However, from 1998, the annual
demand started shrinking. Although much of this is attributable to a larger number of middle income
households going in for first purchase of CTVs (or second hand CTVs) rather than B&W TVs, an important
demand deterrent has been the increase in the excise on B&W TVs and B&W picture tubes. The Union
Budget for FY2002 imposed a 4% excise duty on B&W TVs, which was increased to 8% in the Union
Budget for FY2003. B&W picture tubes account for about 40% of the manufacturing cost of a B&W TV, and
the excise on them was raised from 13% to 16% in the Union Budget for FY2000. Moreover, recently, the
sales tax has been rationalised to the upper ceiling of 12%. However, looking at the household penetration
levels, it may be inferred that the potential for B&W TVs has still not died down.
! Penetration Levels
Figure 2: Overall Household Penetration of B&W TVs
per 1000 households

1995-96 240.0
1992-93 171.6
1989-90 124.7
1985-86 47.6
0 50 100 150 200 250 300
Source: National Council of Applied Economic Research (NCAER)
The figures for household penetration of B&W TVs have been estimated by the NCAER till 1995-96.
According to the data, in the 10 years from 1985-86 to 1995-96, the penetration of B&W TVs rose more
than five times from a level of 47 per 1,000 households to 240 per 1,000 households, at a CAGR of 17.6%.
The penetration for urban households rose 2.9 times from 88.4 to 252.3 per 1,000 households, at a CAGR
of 11.1%. For rural households, the figure increased from 9.6 to 154.8, at a CAGR of over 32%. The growth
was higher for rural households because of a lower base to start with, and also because with the advent of
CTVs and the large-scale replacement of B&W TVs by CTVs, a lot of the B&W TVs in urban areas found
their way into rural and semi-urban areas.

Figure 3: Household Penetration of B&W TVs in India—Urban and ural
300 Urban per 1000 households

Rural 252.3
250
196.9
200
140.4
150
88.4
100
154.8
50 88
9.6 59.3
0
1985-86 1989-90 1992-93 1995-96
Source: NCAER
The important point is the low penetration levels in the low and lower middle income group (as of FY1996,
around 11% and 35%, respectively). While the households in the upper middle and higher income
households can be expected to go in for direct purchase of CTVs, those in the lower, lower middle and part
of the middle income households would still view a CTV purchase as an upgrade over a B&W TV.
! Segmentation
The market for B&W TVs in India can be divided into three segments on the basis of screen size: 14", 17"
and 20".
Figure 4: Size-wise segmentation of the B&W TV Market—2001
17" 20"
10.4% 1.1%
14"
88.6%
Source: TV Veopar Journal
As Figure 4 shows, the small size 14" segment accounts for an estimated 88.6% of the market. The market
for the bigger sizes has shrunk over the years, following the narrowing down of price differentials between
20" B&W TVs and 14" CTVs.
After its inception in 1970, over the decade, B&W TV production (i.e., of the 20" TV) grew at a CAGR of
38%. However, with the launch of the 14" B&W TVs in 1984, besides the coming up of CTVs in 1982, the
growth of the 20-inch B&W TV category was affected adversely. The richer households, who could afford
the 20" B&W TV, graduated to CTVs, while the poorer sections settled for the 14" models. From 1984 to
1989, the 14" segment grew at a CAGR of 73%, while the corresponding figure for the 20" category was
only 9.5%. In the 1980s, the B&W TV market as a whole grew at an average CAGR of 15%.
The 1990s were marked by a rapid decline in the 20” B&W TV segment, which was replaced by an
intermediate 17” segment. Currently, the demand for B&W TVs is declining because of the increasing
preference for CTVs and the development of a big second-hand CTV market.

Figure 5: Trends in TV Production in India

Million units
14 B&W Colour
12
10
8
6
4
2
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Source: Electronics Industry Information System
A good brand of B&W TV (20”) which can support cable channel is now available at Rs. 4,000, while an
average 14” CTV is available in the range of Rs. 6,000-8,000. Second-hand CTVs are available for Rs.
4,000-5,000 per set. Thus, the market for bigger size B&W TVs of 17” and 20” is shrinking and these
segments could well be wiped out in the next two to three years.
! Supply Characteristics
The B&W TV industry in India is characterised by the presence of a sizeable unorganised sector. The
unorganised sector accounts for 41% of the industry. In the organised sector, the major players (and their
brands) are Mirc Electronics (Onida), BPL Limited (BPL), Videocon International Limited (Videocon) and
Philips India Limited (Philips). Other players are Salora International Limited (Salora), Crown (Crown), and
Bestavision (Bestavision and Texla). The production of B&W TVs by the major players is often outsourced
from smaller original equipment manufacturers (OEMs) like Astrotech International (based in Noida),
Sparrow Technologies (Goa), Calcom Vision (New Delhi) and Tack (Noida).
The market shares of the various B&W TV brands (based on the analysis by TV Veopar Journal) during
CY2001 are presented in Figure 6.
Figure 6: B&W TV Market Shares—CY2001
Unorganised
sector Onida
41.2% Videocon 11.3%
12.4%
Medium BPL
Philips
Segment 11.8%
4.9%
18.4%
Besides the big four players as mentioned, the other brands in the organised sector are Bestavision,
Salora, Texla, Crown and Beltek.
The structure of the B&W TV industry has undergone substantive changes in terms of the major players.
Till the late 1980s, the major brands in the B&W TV market were Dyanora, Crown, Uptron, Texla, Solidaire
and Weston. However, over the years, the traditional brands in the B&W TV sector lost out to the CTV
brands like BPL, Videocon, Onida and Philips, which have been able to capitalise on their brand equity in
CTV market and dealer network to increase sales in the B&W segment.

Colour Televisions
The colour television (CTV) industry, which traces its origin in India to the early 1980s, is the largest sub-
sector within the consumer durables sector, accounting for a size (in value terms) of Rs. 65 billion.
! Global Scenario
The total size of the global market for CTVs as at the end of calendar year (CY) 2000 was 152 million sets.
From 1996 to 2000, the market expanded at a CAGR of 3.4%. The figure is likely to have risen to around
153 million by the end of 2002.
Of the total global market for CTVs, the North American Free Trade Agreement (NAFTA) countries (US,
Canada, Mexico), Europe and China together account for a 63% share. But India, with nearly 17% of the
world's population, accounts for a meagre 3.8% share of the total market.
The US is the world’s largest market for CTVs with estimated shipments of 21.2 million in 2001. However,
shipments declined 12.4% during 2001, because of the economic slowdown and the high penetration rates.
In value terms, the apparent consumption of TV receivers and radio monitors in the US increased from
US$7.86 million in 1997 to US$10.88 billion in 2001. The increased significance of imports is attested by
the fact that the imports constituted 79.2% of apparent consumption in 2001, compared with 62.3% in
1997. Mexico is the leading supplier of CTV receivers to the US, accounting for 73% (US$4.68 billion) of
US imports of US$6.41 billion during 2001. It is followed by Malaysia (10.8%), Thailand (7.1%), Japan
(2.3%), China (2.2%), and Korea (2.2%). The principal US producers began to shift the assembly of TV
receivers to Mexico in 1968, taking advantage of the cheaper labour there to compete with imports from
Japan. In 1972, Sony of Japan was the first manufacturer to set up a TV manufacturing facility in the US.
Other Japanese companies soon followed, with several buying existing US manufacturers. At present,
many of the major global consumer electronics manufacturers have facilities in Mexico (or contract with
companies with assembly plants in Mexico) for supply to the US market.
In the European Union (EU), consumption of CTVs is influenced by major sporting events such as world
and European football championships and Olympic games, when sales of CTVs generally increase.
Consumption of CTVs in the EU increased from 24.7 million in 1995 to 31 million in 1998, and to 30.7
million in 1999. The production of the EU CTV industry declined from 6.5 million in 1995 to 6 million in
2000. The production capacity in the EU also declined from 7.5 million in 1995 to an estimated 7.1 million in
2000. CTVs are progressively becoming a mature product, where prices are eroded regularly. The erosion
in prices is more evident in the small screen sizes, with a limited number of features and generally used as
the second or third set in households. In the EU, the weighted average unit prices of CTVs increased only
marginally from Euro 300 in 1995 to Euro 319 in 2000, mainly because of an increased preference for
larger-screen sets.
Japan is home to some of the leading consumer electronics manufacturers, such as Sony, Matsushita,
Hitachi, Sanyo, JVC, Toshiba, and Fujitsu. However, in recent years, the industry has been adversely
impacted by a decade-long economic slowdown in Japan, increased offshore production, and increased
competition from cheaper imports from China and Korea. Offshore production accounted for 91.5% of total
CTV production by Japanese electronics industry in 1999, compared with 60% in 1990. Most of the
offshore production facilities are located in China, the US, Thailand, Malaysia, Indonesia and Taiwan.
Expectations were that major events in Japan, such as the football World Cup, would drive an economic
turnaround in 2002. However, factors such as continued sluggishness in stock prices in Japan, uncertainty
in the US economy and complex political situations in several regions further impacted the Japanese
electronics industry. Overall, domestic shipments of CTVs in Japan declined significantly from 9.87 million
in 2000 to 9.63 million in 2001, and to 8.43 million in 2002, mainly because of significantly lower sales of
standard screen (4:3) CTVs. Sales of such CTVs have declined from 8.50 million in 2000 to 8.17 million in
2001, and to 7.03 million in 2002. By contrast, demand for wide-screen and Hi-Vision TVs increased from
1.38 million in 2000 to 1.46 million in 2001, and declined only marginally to 1.41 million in 2002
China is amongst the largest producer of CTV sets in the world. Production has more than trebled during
the last decade to an estimated 40.9 million units in 2001. The Chinese CTV industry first appeared in the
mid-1970s and is now an important segment of the Chinese electronics industry. In the mid-and late 1990s,
the industry reached a mature level and developed a trend toward domination by leading brands while the
CTV market became the most hotly contested of all home appliance markets. Initially, local companies in
China were mainly engaged in technology tie-ups and merger related production with Japanese affiliates in
general, but later began to improve their production technology and use their price competitiveness,
independent sales network, and after sales service networks to produce their own brands such as Konka,
TCL, Nanjin Panda, and Beijing. Local Chinese companies experiencing growth have, over the past several

years, been establishing a real presence in the world's markets. Various Chinese brands of televisions and
refrigerators are now produced locally in such places as Indonesia, Vietnam, the Philippines, India and
Latin America, and are steadily expanding in these markets. Exports of CTV receivers from China were
estimated at US$1.30 billion during 2000, as compared with US$0.66 billion in 1997.
Figure 7: China’s and Japan’s Share of World’s Production Volume of Major Items—2001 Forecast
60%
China Japan
50% 18.5% 18.5%
40%
30% 2.5% 1.3%
20% 38.3% 38.3% 12.6%

23.2% 24.6%
10%
12.9%
0%
DVD players VTR CTV Airconditioners M obile Phones
Source: Japan Economic Foundation
Like the Chinese consumer electronics industry, the Korean consumer electronics industry is export-driven.
During 2001, an estimated 55% of production of consumer electronics was exported. However, in recent
years, production has declined and imports have increased, because of increasing consumer preference
for cheaper Chinese products. Production of CTVs in Korea increased from 2.38 million in 1981 to a high of
15.91 million in 1996, before declining to 9.01 million in 2001. The decline was because of increasing
imports, and increased production offshore. With increased penetration, domestic demand also peaked at
3.15 million units in 1995 before declining to 2.28 million in 2001. As discussed above, a majority of
production of consumer electronics in Korea is exported. However, exports of CTVs peaked at 12.19 million
in 1994, and have since then declined to 7.32 million in 2001. In value terms, exports of CTVs from Korea
have declined from US$2.21 billion in 1996 to an estimated US$1.58 billion in 2000. At present, large
capacities for production of CTVs remains in Korea, and it is estimated that domestic consumption absorbs
only around 15-20% of production, which leaves significant scope for increased exports. Further, domestic
consumption has declined in recent years, resulting in even greater free production capacities in Korea.
! Segmentation of global CTV demand
Worldwide, CTVs are segmented on the basis of screen size into the following categories: small (14"/16");
medium (20"/21"); large (25"/29"); very large (>29").
The bulk of the global demand is for the medium and large screen size segment, although the very large
premium segments is growing rapidly. During 2000, of the estimated CTV demand of 152 million, small and
medium-sized CTVs accounted for 55.3%. The growth trends in the different segments are depicted in
Figure 8.
Figure 8: Segment-wise Trend in Global CTV Demand
180 Small (14"/16") Medium (20"/21") Large (25"/29") Very Large (>29")
160
140
120
100
80
60
40
20
0
1996 1997 1998 1999 2000 2001 2002 (est.)

The share of large and very large screen CTVs is estimated to have increased from 45% in 2000 to 48% in
2002.
! Domestic Market Size and Growth

As discussed earlier, the CTV market in India took off on the heels of certain sporting events of the 1980s,
starting with the Asian Games of 1982. As a result of such demand drivers and also because of the low
base to start with, in the late 1980s, the CTV market witnessed a rapid growth rate. From FY1986 to
FY1990, the offtake of CTVs increased at a CAGR of 19%. From FY1991, however, the market stagnated
for about two years. Because of the high rates of excise duties passed on to end-users, the initial euphoria
got toned down to some extent. In 1993, to push up the sagging growth rate, the Government reduced the
excise and customs rates. But the predominant factor that led to the rejuvenation of the demand after two
years of lull was the advent of cable TV and the arrival of foreign satellite channels.
Figure 9: Growth Trends in Domestic CTV Market
7 Market Size million 45%

Growth rate %
6 39.6% 5.7 5.8 40%
37.3% 5.4
35.3% 35%
5
4.0 32.1% 30%
4 25%
17.6% 3.0
3 20%
2.2
1.9 15%
2 1.3
10%
8.1%
1 5%
0 1.1% 0%
FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 CY2000 CY2001
The CTV market grew at a CAGR of 32.1% from FY1995 to FY2000. The growth rate had dropped in
FY1997 because of a brief recessionary phase. But during the period FY1997 to FY2000, aided by factors
such as the implementation of the Fifth Pay Commission's recommendations and the World Cup Cricket,
the demand for CTVs took off again.
The CTV market in India had a size of 5.8 million sets during CY2001. By comparison, sales in CY2000
amounted to around 5.74 million sets. The market increased at only 1.1% during 2001, compared with
14.7% during 2000. The slowdown was because of increased sales during the earlier years, economic
slowdown, and natural calamities. The market is expected to have grown to around 7 million during 2002,
mainly because of increased sales during the football World Cup, and the ICC Cricket trophy in Sri Lanka.
! Segmentation
In India, since the very large CTV segment (size > 29 inches) is a small one, the market can be segmented
into three broad categories: small (14"/16"); medium (20"/21"); and large (25"and bigger).
Figure 10: Segment-wise Growth Trend in Domestic CTV Market

millions
Large Screen
6 20"/21"
5 14"
4
3
2
1
0
FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 CY2000 CY2001

With a market share of 76% in CY2001, the medium size segment (20"/21") constitutes the bulk of the
market. However, of late, the small size and the large size segments have grown at faster rates. The
average growth rates over the last five of the different size segments in the CTV market are compared
below:
Table 1: Segment-wise Growth Rates in CTVs--FY1996 to CY2001
CAGR
(FY1996 to CY2001)
Small size 27.3%
Medium size 20.5%
Large size 21.2%
Overall 21.7%
! Penetration levels
According to NCAER estimates, the penetration levels of CTVs in Indian households grew from a level of
12.2 per 1000 households in FY1986 to 78.9 per 1000 households in FY1996 (more than six times in 10
years). The penetration level is expected to have gone up to 150 per 1000 households in 2000.
Figure 11: Overall Penetration Levels of CTVs (per 1000 households)
per 1000 households

1999-2000 147.0
1995-96 78.9
1992-93 55.2
1989-90 41.3
1985-86 12.2
0 20 40 60 80 100 120 140 160
Sources: NCAER and TV Veopar Journal (the latter quoting Francis Kanoi study)
The urban penetration levels have grown more than eight times from 40 per 1000 households in 1985-86 to
350 per 1000 households in 1999-00, while the rural penetration levels have multiplied more than 38 times
in the same period, because of a low base to start with.
Figure 12: Household Penetration Levels of CTVs--Urban and Rural
400 Urban 350.0

Rural per 1000 households
350
300
250 211.8
200 160.2
150 119.1
100 50.0
40.4
50 16.2 26.4
1.3 9.0
0
1985-86 1989-90 1992-93 1995-96 1999-2000
Sources: NCAER and TV Veopar Journal (the latter quoting Francis Kanoi study)

! Geographical Demand Distribution

The penetration of CTVs across regions is depicted in the following figure.
Figure 13: Penetration of CTVs across regions
West 19.4%
South 18.4%
North 13.3%
East 7.9%
0% 5% 10% 15% 20% 25%
The Western and Southern regions of the country have higher CTV penetration levels compared with the
national average; the Northern and Eastern zones have lower figures than the average. In terms of annual
CTV demand, historically, the bulk of the purchases have been in the West and the South, while the North
and the East have lagged.
The CTV penetration levels across different States are presented in Figure 14. The Northern region is
characterised by a disparity in penetration amongst the States included. Although Delhi leads the States in
CTV penetration, its lower total population lends a small weight to the Northern zone, while Uttar Pradesh,
the State with the largest population, has a much greater weight. Among the Southern and Western States,
the penetration is more equitably distributed. As in the case of most consumer assets, the penetration is
also skewed towards urban areas.
Figure 14: Penetration of CTVs--Across States and Population Centres

percentage
Delhi 59.2 60
Kerala 34.1
Punjab 29.4 50
Maharashtra 25.2
Gujarat 23.8 40
Tamil Nadu 20.0
Karnataka 16.7 30 57.1

Haryana 15.5
45.1
West Bengal 12.4 20
Andhra Pradesh 11.8
33.4
Assam 10.9 10 22.9
Madhya Pradesh 9.3
Rajasthan 8.3 0 5.0
Uttar Pradesh 6.3
Orissa 6.0
Bihar 3.7
0 10 20 30 40 50 60 70

! Supply Characteristics
The major brands in the Indian CTV industry are BPL, Videocon, Onida, LG, Sony, Akai, Aiwa, Samsung,
Philips, Panasonic, Sharp, Sansui, Thomson and Daewoo. Of late, new brands like Konka and TCL have
also entered the market.
The total market size of CTVs in India in CY2001 was 5.8 million units. The market shares of the various
CTV brands (for CY 2001 and CY1999) were as follows:
Figure 15: CTV Market Shares—CY2001 and CY1999
CY2001 CY1999
Panasonic
2.8% Sansui
Others BPL
5.1%
Others 6.9% 22.5%
Thom son Sharp
3.0% 14.0% Videocon
11.2% 2.9%
BPL Sony
Sansui 16.8%
Panasonic 5.0%
7.2% Philips
2.1% 5.7% Videocon
16.0%
Sharp
Sony Aiwa
3.0%
2.8% Onida 8.4% Sam sung
9.5% Sam sung 8.2%
LG
Philips Aiwa 10.3% Onida
10.8%
4.6% 4.7% LG 9.0%
7.4%
Although the Indian CTV market is still dominated by older players of domestic origin, these players are
steadily losing ground to the multinational players. BPL continues to be the market leader, with an
estimated 16.8% share, followed by Videocon. However, BPL lost market share of around 2.7 percentage
points in CY2000, and 3 percentage points in CY2001. Its market share is likely to have declined to around
10.5% during CY2002. Videocon’s market share has declined from 16% in CY1999 to 11.2% in CY2001,
and an estimated 7.9% during CY2002. Including Akai, Sansui and Toshiba, Videocon’s market share was
an estimated 20% during CY2002. Onida, whose market share had declined in the mid-1990s, has
reported a 0.5 percentage point increase in market share during CY2001, mainly because of higher sales
of all sizes, especially 14”. However, Onida’s market share has declined to an estimated 8.5% during
CY2002, because of stiff competition and aggressive promotion of 14” models by competitors, especially
Oscar, LG and Philips. Another established player—Philips India Ltd.—also lost market share during
CY2000, but increased market share by 1.1 percentage points during CY2001. During 1999-00, PIL had
sold its CTV unit at Salt Lake, Kolkata to Kitchen Appliances (belonging to the Videocon Group). On the
other hand, LG and Samsung have managed to increase their market shares on the strength of aggressive
marketing. LG claims to have sold an estimated 1.12 million CTVs during CY2002, compared with 0.65
million during CY2001. LG’s market share increased from 7.4% during CY1999 to 10.8% during CY2001,
and an estimated 14.5% during CY2002. On a monthly basis, LG has captured market leadership position
during late-2002. Samsung’s market share has also increased from 8.2% during CY1999 to 10.3% during
CY2001, and an estimated 11.3% during CY2002. It claims to have sold 1 million CTVs during CY2002,
including 0.85 million in the domestic market.
Sony, whose strategy has been to be a value-driven player rather than a volumes-driven one, has also
seen further erosion in its market share. Its market share during CY2002 was estimated at 3%, compared
with 2.8% during CY2001. Thomson also gained market presence in CY2001.
! Installed Capacities
The total capacity for CTVs in India is around 8.4 million units per annum. The individual installed
capacities of domestic CTV manufacturers (FY2002) are presented in Table 2.

Table 2: Installed Capacities of CTV manufacturers in India

Company/Group Installed Capacity
(units per annum)
FY2002
BPL Group 950,000
Philips India Ltd. 149,000
Daewoo Anchor Electronics Ltd. 200,000
LG Electronics India Ltd. 1,000,000
Samsung India Electronics Ltd. 1,000,000
Videocon Group 3,800,000
Weston Electroniks Ltd. 200,000
Matsushita Television and Audio India Ltd. 200,000
Mirc Electronics Ltd. 652,000
Kalyani Sharp India Ltd. 200,000
Total 8,351,000
! Profiles of Major Players
Table 3: Profiles of Major CTV Players
Company/G Collaborations/Le Manufacturing Brands/su Key strategy

roup vel of integration capacity (units b-brands
per annum)
BPL Group Started off Bangalore, BPL Initially, BPL positioned itself in the
BPL Ltd. business with a Karnataka market as the quality leader;
technological (900,000) however, with the coming in of
collaboration with Doddaballapur, multinationals, like LG, Sony and
Sanyo Ltd., Japan; Karnataka Samsung, the positioning got diluted.
Has a capacity for (50,000) CTV sales on a downward trend
producing CPTs (it since FY2000. During late-2002, it
took over Uptron’s lost its market leadership position to
facility in 1996, LG. A group company—BST Ltd.—
renaming it BPL which suffered substantial erosion of
Display Devices margins in selling the ‘Evelux’ brand,
and raising its has quit the business. BPL expects
capacity from 0.75 to increase market share through
to 1.4 million units several initiatives and promotional
per annum); plans schemes. It also expects to launch a
to set up a facility range of new products including an
to manufacture upgraded Studioline range of four
pin-free CPT, with CTV models, a new Matrix range of
technology from flat CTVs, and new FX series home
Toshiba. theatre televisions.
Manufactures its
own printed circuit
boards (PCBs).
Videocon Outsources CPTs Chittegaon, Videocon Videocon had a price-led strategy till
Group completely; Aurangabad the 1990s, but shifted to a brand
Videocon assembles CTVs (2,500,000) building one when it entered into a
Internationa mostly in its plants Kolkata Akai collaboration with Akai, Sansui and
l Ltd. and the balance is (500,000) Toshiba to market these brands.
Kitchen outsourced on a Hyderabad Sansui Videocon has restructured its
Appliances job work basis (400,000) business with each of its CTV
Pvt. Ltd. from small local brands being converted into
affiliate producers; independent profit centres. In
Produces glass addition, it has adopted product
shells, which it innovation as a key ingredient to its
sells to the CPT overall strategy, as exemplified in its

manufacturers. launch of Internet TVs.

Has entered into a
tie-up with
Telecruz Tech, US,
for outsourcing the
necessary chips
for its Internet TVs.
Mirc Outsources CPTs Kudus Wada, Onida Mirc Electronics started off with an
Electronics and chassis (the near Thane, Candy innovative positioning of its Onida
Ltd. latter from JVC); Maharashtra KY Series brand through The Devil and
(500,000) Multiview Neighbours’ Envy, Owner’s Pride ad
Vasai, near lines. Over the last three years, with
Thane, the onslaught of foreign brands, the
Maharashtra company modified its strategy to
(152,000) product innovation and extensive
sub-branding. To outsmart
competition, it has launched a slew
of models with specific features
under different sub-brands: the new
14” CTV, available in different
colours and with cordless
headphones (named Candy), the
integrated Internet TV (named
Webcruiser), 100% flat TV, and low
priced KY Thunder Theatre. To
increase market share, expects to
increase reach in semi-urban and
rural areas, introduce a new variant
of KY Thunder and upgrade the
economy model ‘TVE Series’. As
part of the marketing strategy in the
semi-urban and rural areas, the
company is planning to set up
around 300 sub-dealers and
distributors.
Philips Outsources CPTs Pune, Philips With the entry of multinationals like
India Ltd. completely; Maharashtra Power Sony, LG and Samsung, Philips’
(PIL) Has its own (149,000) Vision market reputation as a quality leader
injection moulding Matchline got diluted, especially in the CTV
facility for making segment. However, it has sought to
TV cabinets; re-establish its image recently with
Manufactures its the launch of a slew of new
own PCBs from products, including digital
outsourced widescreen TVs under the sub-
components; brands Power Vision, High Definition
initiated Rear Projection TV and MatchLine
discusssions with Real Flat TV. Has targeted market
Samtel Color Ltd. share of 8% during 2002. Targeted
(SCL) for an sales increase from 0.36 million in
arrangement 2002 to 0.45 million in 2003. Expects
whereby to introduce 28 models during 2003,
PIL will offer of which 22 would be replacements
technology support of existing models with more
to SCL for advanced ones.
manufacture of
pin-free CPTs for
use in flat CTVs.
Sony India Imports its Trinitron Dharuhera, Sony Sony has positioned itself as the
Ltd. picture tubes from Haryana Wega quality leader, especially in terms of
Sony Corporation, (300,000) Trinitron picture clarity, made possible by its
Singapore. Having patented Trinitron technology. To
already invested drive home its USP, it uses Trinitron
heavily in the as a sub-brand. Since it has to
Singapore facility, import its picture tubes, the prices on

the company has Sony models are generally higher

deferred setting up than the corresponding offers from
a CPT facility in competition. Has discontinued the
India. However, manufacture of curved screen CTVs
the other and plans to focus only on flat TVs.
components are Plans to increase exclusive ‘Sony
manufactured in its World’ outlets from 26 to 40 during
Indian facility. FY2004. These outlets contribute to
10% of sales. Merger of Aiwa with
Sony is expected to enable both
brands to grow in strength under a
unified electronics strategy.
LG Partial integration Greater Noida, LG Started off with a quick nationwide

Electronics in CPTs through a Uttar Pradesh Sampoorn launch (within five months) of
India group company, (1,000,000, a models, spanning all price segments
Limited LG Hotline (which being Golden Extensive sub-branding for the
(LGEIL) is a collaboration expanded to Eye diverse product range, e.g.,
between LGEIL 1,500,000)* Roving Sampoorna for the low-end CTVs,
and the Hotline Eye Maestro for the higher end, and
Group); also Maestro Flatron for flat TVs
sources CPTs from Flatron Aggressive promotion through
Samtel Color Ltd. Joymax widespread ad campaigns
(other components Product differentiation (e.g., through
are manufactured Golden Eye technology)
in its plant) Has captured market leadership
position during 2002.
Samsung Outsources CPTs Noida, Uttar Samsung The main features of Samsung’s
India completely either Pradesh Tantus strategy have been:
Electronics from parent or from (1,000,000) Plano Aggressive marketing
Limited domestic CPT Vision Plus Rapid enhancement in product
manufacturers Metallica portfolio
Super Working capital control—reduction in
Horn debtors days (through a cash
Hi-tron discount scheme to reduce dealers’
collection period), and in inventory
levels
Initiative towards shop floor
productivity improvement (through a
programme called Challenge 3000,
with a target to manufacture 3,000
CTVs per day)
Daewoo Previously Greater Noida, Daewoo In contrast to the other Korean

Anchor imported CTVs as Uttar Pradesh players, Daewoo started off on a
Electronics completely built (200,000) low-key note with a lesser thrust on
Limited units (CBUs) from marketing and a limited product
its parent range. It is now getting assertive and
overseas; recently raising its advertisement
set up CTV expenditure. Besides, it is launching
manufacturing new models targeted at the rural
plant in Greater markets.
Noida, Uttar
Pradesh
Matsushita Currently Noida, Uttar Panasonic Matsushita entered the Indian
Group outsourcing CPTs Pradesh Tau market by taking over NPIL from
Matsushita partly from (200,000) Salora International Ltd. and
Television domestic suppliers outsourcing the marketing function
and Audio and partly from for the entire Matsushita Group to
India Ltd. Japan; other NPIL. The Group has followed a
(MTAIL) components cluster management strategy
National manufactured in- whereby key support functions of
Panasonic house; among flat different product businesses have
India Ltd. TVs, select high- been centralised in order to cut down

(NPIL) end models are overheads and streamline

being imported operations. Of late, the Group has
tried to confront competition with its
global range of flat TVs, sub-
branded Tau.
TCL It had a Has plans to TCL TCL’s strategy, like that of other
collaboration with initially import Chinese players, is price-driven, with
Baron kits from China the company offering large screen
International, and assemble CTVs at very low rates.
called TCL Baron in India.
Holdings, which
makes and
markets CTVs
under the TCL
brand. The
collaboration was
called off in 2001.
*estimated
! Product USPs
The product USPs of the major players in the Indian CTV market are presented in Table 4.
Table 4: Product USPs of Major CTV Players

Player Product USPs
BPL # Quadra Point Focus (QPF) technology (developed in collaboration with Toshiba and
Sanyo of Japan), resulting in greater sharpness, higher contrast and depth, rich
natural colours and corner-to-corner clarity
# Perfect Image Linearity in 100% Flatvision models—keeping images in perfect focus
at every point on the screen, thereby ensuring crisper, clearer pictures
Studio Line 21” claimed to be world’s first 1,000W, 7-Speaker CTV. Claims to give
dynamic depth, clarity and low frequency response. Contains High-Power D-MOS
Amplifier that claims to provide exceptional clarity and zero power circuit
interference at high volumes.
Onida # Candy-14” CTVs offer from Onida available with cordless headphones and in
various attractive colours; positioned as a fashion statement for the independent
urban youth
# Webcruiser—one of the first Internet TVs in India—offering a 2 MB memory and
Internet audio files playback (did not take off, as with 2 MB, it could only be used for
e-mailing)
# KY Thunder incorporates bass blaster, which claims to provide greater wattage and
better quality sound
# KY Home Theatre (priced at Rs. 43,990) consists of a 29” screen with a built-in
amplifier and 5.1 Circle Surround technology accompanied with four cabinet
mounted speakers and a two speaker Bass Blaster unit. Contains in-built
DVD/VCD/SVCD/Audio-VCD/MP3 player. It also has four additional direct reflect
surround speakers for full theatre effect. Circle Surround claims improved spatiality
and more accurate localisation of sounds on Dolby Surround material, and an
enveloping, lifelike sound field on regular stereo recordings.
Philips # AI (Artificial Intelligence) picture control, which controls picture parameters sensing
the ambient luminosity conditions
# Automatic picture adjustment so as to eliminate distortion and fuzziness at edges
# `Pixel Plus' Technology for improved picture quality
# Èye-fi’ (Eye-Fidelity) models in 21” and 29” that claims to reduce eye fatigue
through automatic adjustment of picture parameters such as brightness, contrast,
and sharpness. Èye-fi’ models also have DigiSignal meter that claims to measure
the signal strength of the antenna input through a complex digital algorithm patented
by Philips. The unique benefit of the DigiSignal meter is to enable the roof top aerial
to be perfectly aligned for maximum signal reception strength
# Cricket game embedded into all its TVs priced Rs. 12,000 and above per set.
Viewers can choose the gaming option as they would choose any channel and play
using the remote

# Èye-fi’ feature, working together with Intelligent TV, changes several picture
parameters by sensing the incoming signal at the antenna input of the TV. Intelligent
TV claims to detect the strength and signal to noise ratio of the incoming signal and
automatically boosts the signal, if weak.
Sony # Trinitron Wega is claimed as the world’s flattest TV screen. Distortion is claimed to
be minimal so that the picture remains natural and constant from whatever angle the
screen is viewed. Flat screen also claims to dramatically reduce reflections caused
by ambient light, thereby reducing eye fatigue
# High precision deflection yoke claims to reduce colour aberration and picture
distortion around the edges of the screen. The yoke claims to improve focus
uniformity by 30% across the whole screen, assuring sharpness from corner to
corner
# High focus electron gun that claims to deliver crisper, sharper, more precise images
# High tension aperture grille claims to prevent colour spill typical of other systems
# Intelligent volume and intelligent picture.
LG # Golden Eye technology in the flat TVs, which ensures automatic adjustment of
screen brightness based on the ambient luminosity conditions
# In-built cricket game in select models
# LG Golden Eye claims to be the world’s first TV providing wrinkle-free viewing.
Golden Eye is an advanced circuit developed by LG, which automatically adjusts
image parameters like colour, brightness, and contrast in response to any change in
ambient light conditions
# Automatic Volume Leveller—Smart circuit which claims to eliminate the changes in
sound intensity when one switches from one channel to another
# 40” Plasma TV with a depth of 78 mm claimed to be the world’s thinnest.
Samsung # Bio Range of colour televisions (available in 14” and 21”) with Bio Ceramic Coating
on the Picture tube that emits Far Infra Red (FIR) rays when switched on. Samsung
claims that the FIR Rays penetrate the skin of the viewer and get absorbed by the
human body, leading to the release of body toxins, enhanced metabolisation and
increased micro blood circulation
# High-end 42” Plasma Display Panel (PDP) that weighs 32 kgs and has a thickness
of 89 mm. The PDP supports a 160 degrees viewing angle, which is higher than
Projection TVs and implies that viewers sitting off the side of the screen can still see
the whole image. Product priced at Rs. 475,000
# Tantus Projection TVs incorporate 100 Hz technology, which claims to eliminate
flickering
# SuperChip claims to promote product reliability by removing possible interference
among video components. Also claimed to have been enhanced with an additional
sharpness, noise reduction and white balance improvement circuit
# Zoom Mode for zooming
# Digital Noise Reduction claims to eliminate unwanted background noise and
distortion digitally with special filters. It also claims to ensure crystal clear reception
of sound and picture digitally.
Panasonic # Flat television range `Tau’ sports advanced features like 100 Hz digital scan, digital
comb filter, surround sound, acoustic feedback (AFB) dome sound system and
Quintrix flat picture tube technology
# CTV sets with digital built-in FM receiver. The CTVs have five memory presets that
can memorise up to five specific channels of FM which can be switched from one to
the other by the mere press of a remote button.
Daewoo # Smart chip technology to augment picture quality
# A new technology being developed for select models called actuated mirror array
(AMA) for brighter images.
Sansui # 14” Combi claimed to be India’s first integrated CTV, VCD, ACD and MP3 player
Sharp # World Multi 21 System—feature claims to ensure reception of transmission signals
compatible to NTSC (USA), PAL (India) etc.

! Product Scenario
Figure 16: Price Comparisons—14" CTVs
18,000
16,000
14,000
12,000
(Rs.)
10,000
8,000
6,000
4,000
Akai BPL Daew oo LG Panasonic
O nida Videocon Sam sung Sansui Philips
Salora Sharp Thom son Sony
Currently, the prices of 14" CTVs range from Rs. 6,000 to Rs. 16,000. The lower end of the market is
dominated by brands like Videocon, T-Series, Konka, Aiwa, Onida and older brands like Weston, while
brands like BPL, Panasonic, Sansui, Samsung and Philips have a presence spanning the low and medium
price ranges. The models of LG, Sharp and Thomson belong to the medium price category, while Sony
rules the roost at the higher price end, because of the premium commanded on the strength of quality and
technology. It may be noted that while models of Videocon, Akai, Aiwa and Weston were differentiated in
terms of low price, the entry of Chinese players has set new benchmarks for economic models. Moreover,
with the entry of new players in the 14" segment, Onida is facing tough competition in the fashionable
`Candy’ sub-segment within the 14" CTV segment.
Figure 17: Price Comparisons - 20"/21" CTVs
28,000
26,000
24,000
22,000
20,000
(Rs.)
18,000
16,000
14,000
12,000
10,000
8,000
Akai BPL D aew oo LG Panasonic
O nida Videocon Sam sung Sansui Philips
Salora Sharp Thom son Sony
The price range in the 20"/21" CTV segment is between Rs. 8,000 and Rs. 26,500. The players at the
lower end are Akai, Aiwa, Daewoo, Salora, Sansui and older brands like Weston. The presence of BPL,
LG, Onida, Panasonic, Samsung, Thomson and Videocon spans the low to medium price range. Models of
Sony occupy the medium to premium price range.

Figure 18: Price Comparisons—Large-Screen Size (25"/29”) CTVs
135,000
115,000
95,000
(Rs.)
75,000
55,000
35,000
15,000
Toshiba BPL LG Panasonic O nida Videocon
Sam sung Sansui Philips Sharp Thom son Sony
Prices of the 25" and 29” models range from Rs. 16,000 up to a high of Rs. 120,000 per set. The lower end
is dominated by Akai, BPL, TCL, Onida, Thomson, Panasonic and Videocon. LG, Samsung, Sharp and
Hitachi span the low to medium price range. Sony's models are present in the medium to high price range,
while Philips' presence spans across almost all the price sub-segments.
! Flat Televisions
The market has also witnessed a game of one-upmanship amongst players, in terms of the degree of
flatness of the picture tube in their models. The players moved from standard rounded screens to flat
square tubes (FST), then to full and flat square tubes (FFST), and subsequently to the 100% flat (or pure
flat) screens. With greater degree of flatness, the viewing angle becomes wider and the corner-to-corner
stretch of picture content increases. In addition to having a curvature, standard tubes are not very popular
these days as they have been found to emit high doses of radiation, which is quite stressful on the eyes.
As the images are shown on a flat rather than a curved screen, pure flat screens offer 160-degree viewing
with virtually no glare. In addition to flatness, new models offer other advantages like superior image
resolution, larger bandwidth for a given image resolution, less flickering, rectangular view (a 16:9 wide
aspect ratio available only on expensive systems), 3-D surround sound, bass enhancement with 3D sub-
woofers and other fancy features like sleep timer/wake up call. The advantages accruing out of flat-screen
TVs would become more obvious with the availability of digital programming. However, pure flat screen
TVs are significantly more expensive than the others.
The flat TV market was estimated at around 215,000 units during CY2001. The market represents less
than 4% of the total CTV market in India. The bulk of the flat TV demand is in the 21" size segment,
followed by the 29" segment and then the 25" segment.
Figure 19: Size-wise Segmentation of the Flat TV Market—CY2001
25" 29" and above

4% 6%
14"/15"
3%
21"
87%

The flat TV market is dominated by three major brands—Sony, Samsung and LG. As Figure 20 indicates,
these three players control nearly two-thirds of the market. Sony is the market leader and has now decided
to phase out all of its conventional TV models and replace them with flat TV models. Samsung and LG are
also highlighting flat TVs as premium products.
Figure 20: Market Shares in Flat TV Market—CY2001
Philips Sony
Others
7.0% 26.5%
8.0%
BPL
9.3%
LG
Videocon 17.7%
9.3%
Sam sung
22.3%
! Projection Television
Projection televisions differ from other TVs in terms of their bigger size (could range from 39 to 90 inches)
and their high-contrast true-to-life images with deep colours in the foreground set against a dark-colour
background. These are also pure flat TVs, providing a larger viewing screen angle, and work well in home
theatre systems. In contrast to conventional TVs, projection TVs form a small image on a device inside the
projector—either a cathode ray tube (CRT) or liquid crystal display (LCD)—and then shine that image onto
a large screen located elsewhere. In one type of projection TV, the screen is located within the TV box
itself. This type of projection TV is called a rear or reflective projection. In this type, light reflects off the
projection display panel and is then projected onto the screen. In another type of projection TV, the screen
is located across the room. In this type of projection TV, called a front or transmissive projection, light
passes through the image-forming display panel and is then projected onto a screen.
! Plasma Television
Plasma television is the latest innovation in the TV industry worldwide. The plasma technology enables
screens to be made perfectly flat and very thin, with most sets measuring about 100 mm (4 inches) from
front to back, so that they can be hung from a wall. Plasma screens use a thin layer of chemical gel that
reacts to an electrical current by changing colour. These have generally 16:9 widescreen formats, and
impressive screen sizes are possible without the restrictions of CRT. However, the prices on the available
plasma TV models are exorbitant and unaffordable for a common household.
Table 5: Plasma TV Product Range of Major Players
Brand Features
Panasonic Tau Plasma (Rs. 700,000): 43”, 89 mm depth, DVD
BPL Plasma Televisions (Rs. 750,000): 42”, wide angle (160 degrees) view, 95 mm depth,
DVD/HD input terminals
LG X-Canvas MT (Rs. 486,000): 40”, wide angle (160 degrees) view, 78 mm depth, DVD,
4:3 aspect ratio
X-Canvas MT (Rs. 990,000): 60”, wide angle (160 degrees) view, 99 mm depth, DVD,
16:9 aspect ratio
X-Canvas MT (Rs. 670,000): 50”, wide angle (160 degrees) view, 16:9 aspect ratio
Philips Match III Line: 32”, 90 mm depth

Plasma Flat TV (Rs. 299,000): 32”, 90 mm depth
Samsung Plasma Monitor (Rs. 475,000): 32”, wide angle (160 degrees) view, 89 mm depth, 32
kgs weight, DVD, 16:9 aspect ratio
Thomson Plasma Television (Rs. 825,000): 42”, wide angle (160 degrees) view, 96 mm depth,
41 kgs weight, 16:9 aspect ratio

VIDEO EQUIPMENT
The other video products, used as accessory input-output hardware to TVs and/or personal computers are
video cassette recorders (VCRs), video compact disc (VCD) players and digital versatile disc (DVD)
players.
Video Cassette Recorders

! Overview
The VCR started out in the 1950s as a video tape recorder (VTR), which used reel-to-reel tape rather than
a cassette. The VTR was invented to replace the kinescope method of recording TV programmes.
However, it was only in the 1970s that the videocassette was invented and simultaneously different formats
of VCRs were launched. Sony Corporation came out with U-Matic VCRs in 1972, which was followed up by
the Betamax VCR (or Beta) in 1975. In 1976, a parallel VCR format called VHS was launched by JVC. In
1983, the 8mm VCR format was launched. Thus, the three basic VCR formats are VHS, Beta, and Video8.
However, most VCRs are VHS.
! Global Perspective
Although the advent of VCRs was delayed, its diffusion across the globe was significantly rapid. VCR had
dominated home recording up to the 1990s, with at least one VCR in some 87% of homes. The VCR had
the advantage of being a low level, widely available and inexpensive technology able to fit readily into
existing communication and transportation networks, and business structures (electrical and other retailers,
cafes, and later service stations, and department stores). Buying or renting pre-recorded films on tape to
view at home is popular. But not everyone finds it easy to program a VCR to record TV programmes. And
even if recorded successfully, it can later be difficult to find the right tape—or awkward to find which part of
the tape contains the right programme. VHS tapes have a poor track record of longevity, and there is a
degradation in the quality of the recording over time.
The dominance of VCR is now being challenged by new consumer products that use computer-based
technology: the Personal Video Recorder (PVR) and recordable DVD. With PVRs and recordable DVDs, it
is easier to make recordings and to find them later, and both offer better picture quality. The PVR uses a
computer hard disk to record programmes digitally, and no tape is required. Material can be watched in
non-linear fashion, moving forwards and backwards easily and rapidly, or jumping to points of interest. The
ìnstant’ nature of recording does away with the need to find a new tape, or to search for the blank portion
of an existing one. Devices such the TiVo use a hard disk with a capacity of typically 40GB or more, giving
around 14 hours of high quality recording or more at lower quality. This is much longer than is possible with
any of the current DVD optical disk formats. The number of PVRs is likely to proliferate over the next few
years, as the cost of the technology falls, and as it becomes possible to store increasingly large numbers of
programmes.
DVD players have been one of the fastest growing consumer products of all time. Compared with VHS
tapes, DVD offers greater longevity and unlimited playback without the degradation in quality. But until
recently, DVD in the home was for replaying pre-recorded disks only. This is now beginning to change, with
consumer DVD recorders becoming available. However, there are competing rewritable formats, none of
which is fully compatible with all the others:
! DVD-R is a disk that can be written to once only. Once written, it cannot be erased. DVD-R is useful for
archiving programmes.
! DVD-RAM allows simultaneous record and replay, allowing `live pause’ in a similar way to a PVR.
DVD-RAM can be rewritten more than 100,000 times.
! DVD-RW and DVD+RW, use rewritable disks, but may not allow record and replay at the same time.
The capacity of these rewritable disks, is typically 4.7GB, giving about 2 hours recording time at high
quality.
! Domestic Market
The market for VCRs/VCPs in India expanded to 0.42 million units in FY1990 from 0.08 million in FY1986,
at a CAGR of 51%. However, the advent of cable TV between FY1990 and FY1993 queered the pitch for
the VCR equipment. In these three years, the market for VCRs/VCPs shrunk to less than a third of the size
prior to FY1990.
When the VCR first came into the Indian market, its demand emanated from two different kinds of need:
the need to watch more films in addition to the small fare that used to be dished out by Doordarshan at that
time; and the need to record a favourite programme, especially a serial, for viewing at leisure. With the
advent of the cable TV and a large number of channels, there was a surfeit of films that could be watched

every day on the TV. Then, with the rapid increase in the number of channels, the number of serials also
went up with each channel offering a slew of serials in different time slots over the whole day. While earlier
there were only a few channels that elicited the interest of the viewer audience, now there was a whole lot
of them, not all of which could be watched. The structure of the serial also underwent a change with the
weekly serials going out of vogue and daily soaps becoming the order of the day. Moreover, all the
channels started offering the weekly serials twice a week, and the daily soaps twice a day, so that even if
one missed one of the episodes, one could see it later during the day or week. The need for VCRs was
thus largely obviated.
Figure 21: Trends in Domestic Market in VCRs/VCPs
0.5 million units

0.4
0.4
0.3
0.2
0.2
0.1 0.1 0.1
0.0
FY1986 FY1990 FY1994 FY1998
The economics also worked for cable TV and against the VCR. The cable operator offered at least three
movies a day at just Rs. 100 a month, while if one were to make use of the VCR at home, one would have
to pay Rs. 10 per cassette, which would amount to, for three movies, Rs. 30 per day; besides, there would
be the efforts and time involved in a visit to the video library.
Video Compact Disc Players
! Overview
Video Compact Disc (VCD) was introduced by Philips and Sony in 1993. Using MPEG-1 compression, this
media allows 74 minutes of VHS quality video and CD quality audio to be written to a single CD. VCDs are
written using MPEG-1 White book format, which calls for files to be written with 240 lines of video resolution
and an audio quality of 16-bit, 44.1 KHz stereo. The format is successful at compressing a large quantity of
data into such a small space for two reasons. First, the video and audio streams of the footage are
multiplexed, or integrated, together into a single track. Second, only the changes between video frames
(instead of each separate frame) are recorded, making the overall size of the video component
considerably smaller than uncompressed footage.
The biggest markets for VCD players have been China, Indonesia and Japan; the VCD concept has not
caught on well in the West, which seems to have graduated directly from VCRs to DVDs. Instead of
abandoning the seemingly `doomed’ technology, Philips and Sony discovered a market in developing Asian
countries. China is now the largest producer of VCDs in the world—it produced 15 million in 1999, which
was 25% more than in 1998. The figure went up to 20 million units in 1999. China has become the world's
biggest producer of VCD players and the largest potential market for the product. Out of the Chinese
production, 15-20% is exported to South East Asia, West Asia, India and Russia. The biggest players are
Konka Group Company Limited, Sichnan Changhong Elec. Group Corp., TCL, HiSense and Haier.
However, with the advent of DVD players, a number of suppliers have migrated into the production of DVD
players. Accordingly, the number of VCD player manufacturers reduced from 500 in 1998 to 300 in 2000.
The annual output of DVD players increased from 50,000 in 1996 to nearly 2 million during 1999.

! Domestic Market for VCD players

Figure 22: Shares in the Organised VCD Player Market—CY2001 and CY2000
2001 2000
Sony
Others 7.4% Others
24.5% BPL 5.3% Aiwa/TCL
20.3% Panasonic 29.5%
8.4%
Salora
4.5% T-Series Oscar
14.0% 20.0% Thom son T-Series Philips
Beltek 12.6% 21.1% 15.8%
6.7% Thom son
10.0%
In India, the market for VCDs (and of VCD players) originated in 1996. However, the first adopters of VCD
players were not households, but cable operators, who embraced the product as a replacement for the
Laser Disc (LD) players. In order to compete on the basis of better picture quality, many cable operators
had initially gone in for top-end products like LDPs. It was in keeping with the fact that most English films
coming into India were on LDs. However, LDs were just too expensive, with one LD coming for about Rs.
3,000. The VCD players were cheaper alternatives. Initially, players like Sony imported the single VCD
player models from China. However, because of the greater length of Indian movies, which could occupy
up to three VCDs, the demand for single VCD players among cable operators waned, and three-VCD
players were introduced. Thus, multiple VCD players had been launched in India even when the VCD
concept itself was yet to really take off among domestic customers. Later on, five VCD players were also
launched, enabling the cable operators to show even two movies at a stretch.
The size of the organised market for VCD players in India was estimated at 300,000 units in CY2001; the
grey market accounted for an additional 350,000 units, thus totalling up to 650,000 units. In CY2001, the
total VCD player market has grown very steeply from 180,000 units in CY2000. The major players in the
organised sector offering stand-alone VCD players are Aiwa, T-Series, Philips, Thomson, Panasonic and
Sony. A notable feature over the last two years was the entry of Chinese players through collaborations
with Indian companies. T-Series struck up collaboration with Changhong, while Baron International, which
markets the Aiwa brand, entered into a tie-up with the Chinese player TCL to market the TCL brand as well
(the tie-up was terminated in 2002). The grey market predominantly consists of smuggled imports of brands
like Sony, Pioneer and Panasonic.

Figure 23: Price Comparisons on VCD Players
14,000
12,000
10,000
8,000
6,000
4,000
2,000
Akai BP L Salora Sam sung Sharp T -Series T hom son Beltek
The prices of stand-alone VCD players range from a low of Rs. 2,990 (on a Beltek model) to a high of Rs.
12,990 (on a Sharp). In the organised market, the import of models of Chinese manufacturers like
Changhong and TCL has set new price benchmarks. However, the prices offered in the grey market are
even lower leading to its continued dominance.
Digital Video Disc/Digital Versatile Disc Players

! Overview
DVD was originally meant to be an abbreviation for Digital Video Disc. However, it represents the first
medium for a complete unification of the three technologies, namely computer, television and audio, into a
common format and a common set of standards. Thus, a more appropriate expansion for DVD would be
Digital Versatile Disc.
The DVD is the next generation of five-inch digital optical disc technology after the compact disc, having a
capacity 25 times the former and greater speeds. There are mainly two types of DVDs:
1. DVD-Video (or simply DVD), targeted at home entertainment application
2. DVD-ROM, catering to computer applications
DVD-ROM also includes recordable variations (DVD-R, DVD-RAM, DVD-Rewriteable). Most new
computers with DVD-ROM drives can also play DVD-Videos. Recordable DVDs are available only for
computer-based discs (data only). However, the recording of video to disc, as VHS does with the magnetic
tape, is currently not cost-effective for individual users.
The global market for DVD players in 2000 was estimated at 9.8 million units, as against 7 million in 1999.
The figure is likely to have exceeded 28 million in 2001. The bulk of the global demand for DVD players is
accounted for by the US, whose share is over 50%. In 2000, sales of DVD players in the US surged by
25% over the previous year because of a drop in prices of DVD players. In Europe, DVD player penetration
will go up from 4% in 1999 to 34% in 2002, according to Strategy Analytics. DVD PCs currently account for
75% of the installed base in Europe, but this will fall to 59% by 2002 as TV-based DVD players gain
ground. Between 70% and 90% of European households still own a VCR, but the shift to DVD players is
likely to be rapid. Volume sales of DVD in Western Europe is expected to overtake VHS in 2003.

Although the entry of DVD manufacturers in the DVD market in Japan was slow as compared with the other
countries, the market started picking up from May 1999, owing to both the advent of the rental business for
DVD software and also because of the lowering of prices of DVD players by manufacturers.
In the US, the DVD player market is growing fast, while it has only begun to pick up pace in Europe. The
US market for DVD players in 2000 was estimated at 5 million units, while the European market was
estimated at 1.3 million units. DVD player shipments in the US aggregated 10.25 million during January-
September 2002, as compared with 7.55 million during January-September 2001.
! Domestic Market
Currently, the market for DVD players in India is still a nascent one, characterised by the preponderance of
the grey market. In CY2000, the size of the total Indian market was estimated at 25,000 units, with the grey
market accounting for 15,000 units and the organised one for the balance 10,000 units. In CY2001, the
total DVD player market size rose to 30,000 units, including 19,000 units in the organised sector and
11,000 in the grey market. The major players in the organised DVD player market are BPL, Samsung,
Philips, LG, Thomson and Onkyo. The brands available in the grey market are Pioneer, Panasonic and
Sony.
Figure 24: Market Shares in the Organised DVD Player Market—CY2001 and CY2000
2001 2000
Panasonic Thom son
4.2% 5.0%
Others Others
Onkyo
7.4% BPL 5.0%
4.2% Sam sung
31.6% Philips Onkyo
34.9%
LG 15.0% 5.0%
7.9%
Philips Sam sung LG Sony

21.0% 23.7% 15.0% 19.9%
The prices of DVD players range from a low of Rs. 14,500 (offered on a LG model) to a high of Rs. 129,600
(on an Onkyo model). However, the bulk of the market is contained within the Rs. 15,000-40,000 range.
Figure 25: Price Comparisons on DVD Players
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
Akai BPL Sam sung Sharp Thom son LG Philips O nkyo

Digital Video Recorders

An innovation launched in the US, which seeks to redefine TV viewing, is a combination of a computer and
a VCR-Digital Video Recorder (DVR). It enables viewers to exercise their choice in watching TV
programmes. This is made possible through the presence of a memory chip installed inside the TV
receiver, which automatically searches out and records the programmes pre-selected by the viewer for
replaying them in the future. It receives the video signals from a telecast and compresses them into digital
form, which is decompressed later during playback. A DVR incorporates VCR-like functions—hit, pause
and rewind--enabling it to jump forward and backward during a programme, however with a much greater
speed. While with the VCR, one has to wait for the video tape to fast forward or rewind, in the case of DVR,
with a hard drive, this can happen very quickly. Examples of DVRs launched are TiVo and ReplayTV.
DVRs provide a range of exciting features that liberate a viewer from the mercy of a broadcast schedule.
With TiVo's trick play feature, one can actually stop a live telecast and attend to, say, a phone call before
resuming the telecast. An in-built search engine software lets the viewer browse for programmes being
shown in different channels. The device can even suggest programmes to viewers based on the type of
interests fed as input information by them. The recorders have software that stores and regularly updates
the daily programming information through a telephone connection and a phone modem. Another feature,
provided by ReplayTV, which is raising apprehensions of media broadcasters, is the ad-skip feature, by
which viewers can conveniently skip the advertisements and commercials, as well as other interruptions,
which they consider undesirable.
A recently launched product—Pioneer Elite DVR-7000—gives consumers features like instant one-touch
recording without the cumbersome task of cueing a videocassette to the correct location on the tape. The
DVR-7000 is priced at U$2,000 and is capable of several recording modes: (a) Video Mode, using DVD-
R/RW discs, allows playback on most existing DVD players and DVD drives. Using Video Mode,
consumers can record up to two hours of content on one DVD-R/RW disc. (b) Standard Mode applies
MPEG-2 compression technology for real-time recording of high-quality images using DVD-RW discs, and
offers numerous editing functions. Consumers can record up to 2 hours of Standard Mode content on one
DVD-RW disc. (c) Manual Mode is similar to standard mode, however consumers can record from one to
six hours of content on a DVD-RW disc, depending on the level of quality desired.
Home Theatre
The term `home theatre’ describes an experience as much as it does a product or combination of products.
Home theatre combines a number of audio and video products into one comprehensive system that places
the viewer/listener in the middle of the aural and visual action of a film, TV show, sporting event, or concert.
In a chase sequence, for instance, a car can start out behind the hero and be heard behind the viewer as
he or she turns around to look at it. As the car passes the hero, the sound moves past the viewer too, from
rear to front, co-ordinated with the on-screen action. Planes seem to fly overhead. Trains move past one's
eyes and ears on the screen.
Home theatre may include all or some of the following components: large-screen TV (27 inches or larger),
video equipment, CD player/DVD player, and Laser disc player. Laser discs (LDs) are 12" optical discs,
which hold audio and video information, but are limited to 60 minutes per side. LD players would typically
have an automatic side change, and these can also play CDs. Many LDs have DD or DTS encoding and
require a player and receiver/amplifier with these capabilities.
In India, major players like BPL, Sony and Philips have started offering home theatre products. . However,
these integrated home theatre products are highly expensive and the market for them is likely to remain
confined to high-income households. BPL's home theatre incorporates, among other items, a DVD player,
a 21” or 29” CTV, two front speakers, two surround speakers, one centre speaker, and sub-woofer. The
product is priced at Rs. 47,490 (21” CTV) and Rs. 65,990 (29” CTV). Philips Home Theatre System, priced
at Rs. 34,990, has 200 Watts total power consisting of a 6 speaker package with an active 75W sub-
woofer.

AU D I O P R O D U C T S
Domestic Market
! Demand Characteristics
The size of the total Indian market for audio products is estimated at Rs. 10 billion in value terms. Of this,
radios account for around Rs. 1.3 billion, mono recorders for around Rs. 1.4 billion, and stereo recorders
for around Rs. 1.9 billion. The segment for personal headphone stereos (popularly known as 'walkmans') is
the smallest with a size of Rs. 0.5 billion, while the largest audio products segment is music systems, with a
size of Rs. 4.9 billion.
Figure 26: Audio Product Segment Shares (FY2002) by Value and Volume
By value: Rs. 9.8 billion By volume: 6.53 million
M ono Radio Headphone

Radio Stereos Radio
Recorders M usic
13.3% 11.5% 47.5%
13.8% System s
5.7%
Stereo
Radio
M usic Recorders
System s 13.7%
50.0% Stereo Radio
Headphone Recorders
Stereos M ono Radio
18.9%
4.1% Recorders
21.7%
In terms of volumes, the size of the Indian audio market is around 6.53 million units. Radios still constitute
the largest segment with 3.1 million units, followed by mono cassette recorders with 1.42 million, stereo
cassette recorders with 0.9 million, headphone stereos with 0.8 million, and music systems with 0.37
million.
As in the case of the global audio products market, the trend in the Indian market is also growth in the high-
end audio products like music systems at the cost of the lower-end products like radios, mono cassette
recorders and stereo cassette recorders.
The demand for stand-alone radios dropped historically with the coming up of cassette-based products--
mono cassette recorders and stereo cassette recorders (the latter popularly called "two-in-ones"), which
also have a radio reception facility. According to NCAER's estimates, the market size for radios stagnated
at a level of around 5 million in the mid-1990s. Considering the current figure of around 3.1 million (quoted
in TV Veopar Journal), it may be inferred that stand-alone radios are increasingly being replaced by other
products.
In the recorders segment, in the initial years, production was confined to stand-alone basic tape recorders
and mono combination sets (with radio). However, over the years, the market for basic tape recorders has
stagnated while that for stereo recorders has gone up. According to the Ministry of Information
Technology's estimates, the production of basic tape recorders stagnated at around a level of 85,000 per
annum, before declining to an estimated 60,598 in 2000. On the other hand, the market sizes of mono and
stereo cassette recorders are 1.42 million per annum and 0.9 million per annum, respectively.
The music systems segment of the Indian audio products market has grown from 320,000 units in 1999 to
370,000 units in FY2002. The music systems segment has been the most happening segment with most of
the product innovations happening here. The bulk (more than 90%) of the market is currently constituted by
the mini component systems, while the rest (around 10% in terms of volume) is accounted for by more
technologically advanced systems, called micro component systems. More than 60% of the music systems
market segment (in terms of value) are CD systems, i.e., they can play audio compact discs. The CD
system models could have a single CD changer or multiple CD changers. Multiple CD changers offer
continuous music without repetitions, which is especially useful in parties or get-togethers. They could also

be single-deck (SD) or dual-deck (DD) systems. Of late, value-added CD systems with in-built VCD/DVD
players have become a growing sub-segment within the music systems category.
The headphone stereos (or walkman) segment is estimated to have declined from 800,000 units in 1999 to
750,000 units in FY2002. Although they are called headphone stereos, they may use earphones or
headphones.
Supply Characteristics
! Major Players
The audio products sector is characterised by a large presence of the unorganised sector (including the
grey market), owing to the high incidence of tax on the organised sector. For instance, in the radio
segment, according to TV Veopar Journal, the unorganised sector, including the grey market, accounts for
as much as 41% of the market. Among the players in the organised sector, Philips is a major one,
accounting for around 52% of the total market.
The audio products industry is a rapidly growing one and had a turnover of over 6.5 million units valued at
around Rs. 10 billion in 2001-02. The organised sector accounts for 78-80% of the market, and the
unorganised sector for the rest. The presence of the unorganised sector is predominantly in the lower-end
products segments–radio and cassette recorder segments.
The major players in the audio products industry are Philips, Sony, BPL, Videocon, Aiwa, Panasonic,
Samsung, Kenwood, Thomson and Sansui. While the lower-end audio segments (e.g., mono radio
recorders and stereo radio recorders) are dominated by the domestic players like Philips, Videocon and
BPL, the major players in the higher-end audio segments (music systems, etc.) are Aiwa, Sony, Philips,
Sansui and National Panasonic. The audio products market is characterised by a significant presence of
the grey market (consisting of goods smuggled from abroad), which accounts for, on an average, more
than 30% of the market.
In the mono cassette recorders segment, Philips is the market leader with a 24.4% share of the Rs. 1.35
billion market. BPL and Videocon are the other important players, with segment shares of 6.7% and 4.4%,
respectively. In the stereo cassette recorders segment, Philips has a share of around 38% of the Rs. 1.85
billion market, followed by BPL with 8.6% and Videocon with 8.1%. The other important players are
National Panasonic (5.4% share) and Sony (4.9% share). The major player in the headphone stereos
segment is Videocon (with a share of around 25%), followed by Philips (20%), Sony (10%) and BPL (10%).
The most happening segment in the audio products during the last two years has been the music systems
segment, with new entrants like Sony increasing their market presence at the cost of established players
like Philips. The segment share of Philips is estimated to have dropped from a high of around 40% in 1998
to 33.7% in FY2002.
Figure 27: Market Shares in the Music Systems Segment
BPL Thomson
Sansui
6.1% 6.1%
8.2% Others
2.0% Philips
33.7%
Sharp
Panasonic 4.1%
5.1%
Sony
34.7%

! Price Range
Figure 28: Price Comparisons--Mono Cassette Recorders
2 ,0 0 0
1 ,5 0 0
(Rs.)
1 ,0 0 0
500
-
BPL P h ilip s V id e o c o n
In the mono radio recorders segment again, Sony occupies the premium positioning . The models offered
by other players like BPL, Videocon (including Sansui), Philips and Thomson are priced in the range of Rs.
850-1,575 per unit.
Figure 29: Price Comparisons–Stereo Cassette Recorders
8,000
7,000
6,000
5,000
(Rs.)
4,000
3,000
2,000
1,000
Akai BPL Panasonic Philips Sharp Videocon
In the stereo radio recorders segment, the price range of Videocon and allied brands Akai and Sansui
extends from low to middle, while BPL, Videocon, Thomson and Sansui are present in the medium range.
The models of Panasonic and Philips cover the entire price range, from low to high.

Figure 30: Price Comparisons–Headphone Stereos
8 ,0 0 0
7 ,0 0 0
6 ,0 0 0
5 ,0 0 0
(Rs.)
4 ,0 0 0
3 ,0 0 0
2 ,0 0 0
1 ,0 0 0
BPL Sony P a n a s o n ic V id e o c o n
In the headphone stereo segment, BPL, Thomson, Videocon and Sansui cover the lower price sub-
segments and Aiwa the medium sub-segment, while prices on Sony's headphone stereos range from
medium to high.
Figure 31: Price Comparisons–Low-end Music Systems
1 2 ,0 0 0
1 0 ,0 0 0
8 ,0 0 0
(Rs.)
6 ,0 0 0
4 ,0 0 0
2 ,0 0 0
A kai BPL P h ilip s S ansui

S harp T hom son V id e o c o n S ony
In the music systems segment, BPL's presence is the most pervasive in terms of price segments.
Videocon, Sansui and Akai (all marketed by Videocon) are dominant in the lower price range. Aiwa and
Philips cover the medium to high range, while Thomson, Sony and Sharp offer high-priced models.

Figure 32: Price Comparisons–High-end Music Systems
5 0 ,0 0 0
4 0 ,0 0 0
(Rs.
3 0 ,0 0 0
2 0 ,0 0 0
1 0 ,0 0 0
-
Akai BPL P h ilip s O nkyo
S a n su i S h a rp S on y K en w ood
JVC P a n a so n ic
! Product USPs
The players in the audio sector have tried to differentiate their products on the basis of advanced features.
The product USPs of the major players are indicated below:
Table 6: Product USPs of Major Audio Sector Players
Player Product USPs

BPL # High-end audios incorporate APTEM speaker technology sourced from Denon of
Japan
# Use of Kevlar material (developed by DuPont) to improve bass reproduction
Philips # Bitstream technology (incorporated in CD mini systems) that reads every digital
sound bit claiming to render a near perfect audio reproduction
# G Sound technology claims to provide rich bass and distortion-free music
# Recently launched VCD mini hi-fi, featuring `Woox’ technology patented by Philips.
The technology claims to produce superior bass results
Sony # Variable Attenuation Control System (VACS), which claims to allow minimum
distortion at maximum volume
# New product range of music systems one of the widest in terms of output (from
1,300 W to 7,000 W); AVLS (Auto Volume Limiter System) in personal stereos
(walkmans) ensuring that the sound does not diffuse out to the neighbourhood
# Bass Reflex Body in walkmans—a new body construction to reproduce extra bass
response from compact size body
Panasonic # Claims to have made a revolution in compression techniques with the introduction of
the Secure Digital (SD) card, which is a sophisticated stamp-size memory device
with a high storage capacity of 64 MB, facilitating downloading and transfer of all
digital files, including sound files
# Shockwave metal design for portable audio players, which claims to provide
resistance to external shocks and to water
# Recently launched a MP3 VCD system
Sansui # 16-bit dual converter in all high-end systems, which claims to read and convert the
16-bit digital recording on CD into analog form rendering smooth and clear sound
Thomson # Altima range of music systems feature speaker cones made of Kevlar material,
which claims to help improve bass reproduction

M AJ O R E L E C T R O N I C C O M P O N E N T S
B&W Televisions
The picture tube is the major component in a B&W TV, accounting for around 42% of its manufacturing
cost. The domestic B&W picture tube (PT) sector produced 4.33 million B&W PTs during 2000, as
compared with 6.18 million during 1999. The growth of the sector is dependent on that of the B&W TV
market, and has followed the declining trend of the latter. After showing a positive growth till 1996, the rate
dropped in 1997, after which it remained stagnant during 1998 and 1999, before declining sharply
thereafter.
Figure 33: Trends in Domestic Production of B&W PTs
Production qty (million) left scale

9 Production value (Rs. million) right scale 4,500
8 4,000
7 3,500
6 3,000
5 2,500
4 2,000
3 1,500
2 1,000
1 500
0 0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Source: Department of Electronics (DoE), GoI, Elcina
The major companies producing B&W PTs are Samtel (India) Limited, Hotline Teletube & Components
Limited, Prakash Industries, Rama Vision Limited, Videocon International Limited and Bestavision
Electronics Limited. The installed capacities of the major players are presented in Table 7.
Table 7: B&W Picture Tubes: Capacities of Domestic Majors
Company Annual installed capacity Production

(mn.)
Hotline Teletube & Components 1.60 1.18 (FY2001)
Prakash Industries 1.50 1.05 (FY2001)
Rama Vision Limited 2.00 0.64 (FY2002)
Samtel (India) Limited 3.00 1.65 (FY2002: 15 mths)
Bestavision Electronics Limited 0.48 0.12 (FY2001)
Total 8.58
The market shares of the major players during CY2001 are presented in the Figure 34. Hotline Teletube is
the market leader, followed by Samtel (India), Prakash Industries, and Rama Vision. Another important
player was Bharat Electronics Limited (BEL), which was the pioneer and the only player offering 20" B&W
TVs. BEL had been successfully producing and marketing black and white television picture tubes, using
imported glass shells, from 1969-70. Its capacity was expanded from 30,000 B&W PTs per annum to 0.8
million per annum by end-March 1992. Due to losses, BEL closed down production of B&W PTs in 1998-
99.

Figure 34: Domestic B&W PT Market Shares—CY2001
Bestavision
3.8% Ram avision
18.3%
Sam tel
28.0%
Prakash
18.9%
Hotline
31.0%
The decline in the B&W PT sector has adversely affected the dependent sectors further upstream, like
glass shells, electron guns and B&W deflection components, which are used for making the PTs. Glass
shells account for around 43% of the cost of B&W picture tubes. The total production of glass shells for
B&W TVs in India was 12.58 million in 2000. The predominant players here are Samcor Glass and Hotline
Glass. The electron gun accounts for around 14% of the cost of a B&W picture tube. The total production of
electron guns for B&W TVs in India was 10.87 million in 2000. The companies producing electron guns are
Hotline Teletube & Components Limited, Elbeam Devices Limited and Sambel Electron Devices. Deflection
components constitute 9-10% of the cost of a B&W PT. The total production of deflection components for
B&W TVs in India was 20.35 million in 2000, with most of the production coming from the unorganised
sector. The players in the organised sector making deflection components are Salora International Limited
and Samtel (India) Limited. All the other companies are in the small-scale sector.
Colour Televisions
Initially, CTVs were produced with the entire kits being imported from overseas by a Government
organisation—Electronics Trade and Technology Development Limited (ET&T)—at a price of around
US$155 per set. Only the wooden TV cabinet and some other parts would be sourced locally. The
production of colour picture tubes (CPTs) in India started in 1988, with three producers, namely, Samtel
Color Limited (SCL), JCT Electronics (JCTEL) and Uptron Color Limited (UCL), setting up their
manufacturing facilities. Uptron was acquired by BPL (after it went sick) and was renamed BPL Display
Devices.
Figure 35: Trends in Domestic CPT Industry Growth
7
million units 5.7 5.9
6 5.5
5
4.0
4 3.0
3 2.2
1.9
2 1.3 1.4
0.9
1
FY1993
FY1994
FY1995
FY1996
FY1997
FY1998
FY1999
FY2000
FY2001
FY2002
The domestic CPT industry, derived from the end-user CTV sector, grew to a size of 5.9 million units per
annum in FY2002. While the total industry demand increased at a CAGR of 21.4% between 1994-95 and
2001-02, the rate was 22.5% between 1997-98 and 2001-02. This growth has been driven by the strong
growth in the domestic CTV market which, in turn, has been aided by a continuous drop in prices, easy
consumer financing, millennium events, and a shrinking B&W TV market.

Figure 36: Segment-wise Growth Trends in CPT Market
million units
6,000 14" 20" 21" Large
5,000
4,000
3,000
2,000
1,000
0
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
In terms of size, the 20" CPT used to be the largest segment till FY1999. In FY2000, it was upstaged by the
21" fully flat square tube (FFST) segment. The FST (full square tube) and FFST are two levels of picture
tube flatness, with FFST providing a much wider viewing angle than FST which, in turn, is only slightly
flatter than the 20" CPT. Since the price of a 21" FST CTV is higher than that of a 20" CTV, while in terms
of flatness, the difference is not perceptible, consumers have been preferring the 20" to the 21" FST,
leading to decline in demand for the latter. CPTs larger than 21" got a major boost on account of the price
reductions led by Akai in the two years 1997-99, and have been able to corner a 4% share. At the lower
end, the share of the 14" CPT segment increased to 20% in FY2002, in part because of an innovative
product line launched by many manufacturers.
There are four major CPT manufacturers in India at present: Samtel Color Limited (SCL), JCT Electronics
Limited (JCTEL), LG Hotline Limited (LGH), and BPL Display Devices Limited (BPPD). The total annual
installed capacity in the domestic CPT industry is 10 million units.
Table 8: Installed Capacity in CPTs
Capacity Share
(million units per annum) (%)
14” 20” 21”FST 21” FFST Total
SCL 1.80 1.30 2.20 5.30 53%
JCT Electronics 0.80 1.80 18%
LG Hotline CPT 1.50 15%
BPL Display 1.40 14%
Total 10.00
SCL is the largest player in the industry with 53% of the installed capacity. During FY2002, it increased its
installed capacity from 3.1 million units to 5.3 million units. The market share movements in the past have
been as under:
Table 9: Market Shares of Various CPT Players
in ‘’000 pcs. 1997-98 Share 1998-99 Share 1999-00 Share 2000-01 Share 2001-02 Share
SCL 923 30.6% 1,441 36.1% 2,066 37.9% 2,234 38.9% 2,138 36.1%
JCTEL 1,037 34.4% 733 18.3% 1,135 20.8% 1,045 18.2% 782 13.2%
LGH 272 9.0% 852 21.3% 938 17.2% 1,130 19.7% 1,430 24.1%
BPLD 124 4.1% 425 10.6% 724 13.3% 850 14.8% 1,100 18.6%
Imports 659 21.9% 545 13.6% 583 10.7% 478 8.3% 475 8.0%
Total 3,015 100.0% 3,996 100.0% 5,446 100.0% 5,737 100.0% 5,925 100.0%
The industry leader SCL increased its share from FY1997 to FY2002 on the strength of its presence in
different size segments. During FY2002, it had a market share of 97% in the 14” segment, and 22% in the

20”/21” segment. LG Hotline is the largest player in the 20”/21” segment with a market share of 31.7%. BPL
Display Devices has also managed to increase its market share, because of supply to the BPL Group. BPL
Display Devices has also managed to raise its share with growth in the 21" FFST segment. JCT
Electronics, on the other hand, has lost market share because of problems in its production line at Baroda
for 14" tubes and 21"FFSTs, and temporary lockout at Mohali unit (capacity of 0.8 million CPTs per
annum). LG Hotline CPT has improved its position surpassing JCT Electronics for the second rank. Hotline
recently bought out the 50% equity stake held by LG Electronics of Korea in their joint venture LG Hotline
CPT Ltd. A group company—Hotline Teletube & Components Ltd.—is planning to set up capacity for
manufacture of 1.8 million CPTs per annum. The proportion of imports has come down drastically—from
41% in FY1997 to 8% in FY2002, because of the high import tariffs imposed on CPTs (import duties were
raised in FY1999 from 30% to 35%). Currently, only CPTs of sizes 14” and 25" and higher are being
imported by domestic CTV manufacturers. In the domestic market, prices are set at a level that matches
the landed cost of imported CPTs, thus making imported tubes uncompetitive in the domestic market. Any
weakening of the Indian Rupee vis-à-vis US dollar is directly built into the cost of domestic CPTs and the
domestic players stand to gain from the depreciation of the domestic currency.
Around 5.85 million glass shells for CTVs were produced in India during 2000, with the rest being imported
from South East Asia and Japan. The largest player in the domestic market is the Videocon Group
(erstwhile Videocon Narmada Electronics Limited, which was later merged with Videocon International
Limited), which produces glass shells with technology from Techneglass, Owens, Illinois. In India, around
1.68 million electron guns were manufactured in 2000 by two companies: Elbeam Devices Limited,
Bangalore (Karnataka); and Sambel Electron Devices, Ghaziabad (Uttar Pradesh). There are around 22
indigenous manufacturers of CTV deflection components in India, producing around 17.4 million units per
annum. Most of these players are in the small-scale sector. There are 19 manufacturers of electronic TV
tuners for CTVs, all of whom are in the unorganised sector. They produced around 2.46 million units in
2000.
Audio Equipment
The major components used for the production of audio products are: Audio Tape Deck Mechanism
(ATDM), Micro-motors, Magnetic Heads, and Loudspeakers.
The size of the ATDM production sector in India is around 14.77 million per annum (figure as of 2000).
There are around 12 indigenous ATDM producers, of whom the manufacturers in the organised sector are
BPL Sanyo Technologies Limited, Philips India Limited and Elin Electronics Limited. ATDMs for higher-end
audio equipment are largely imported.
The indigenous industry produces 14.3 million micro-motors per annum (as of 2000). There are close to 11
indigenous manufacturers, of which only Elin Electronics is in the organised sector, while the rest are all
small-scale players. The manufacturing process is primarily an assembly-oriented one and can be carried
out with low investment. A number of key components like rotors, shafts, brush assembly and electrolytic
capacitors are imported.
The indigenous component industry produced around 29.47 million loudspeakers during 2000. There are
close to 27 manufacturers of loudspeakers, of which the players in the organised sector are BPL
Engineering Limited, Philips India Limited and Salora International Limited.
The indigenous component industry produced around 10.69 million magnetic heads per annum in 2000.
There are four manufacturers of magnetic heads, and all are in the small-scale sector.
Other raw materials

In addition to electronic components, plastics, mainly polystyrene (PS), are also used for plastic cabinets in
TVs and audio products. PS is used not only in consumer electronics but also in many white goods.
ECONOMICS—CONSUMER ELECTRONICS
The audited annual accounts of Videocon International Ltd. (VIL) for FY2002 are not yet available.
Therefore, in carrying out our financial analysis of the white goods manufacturer, we have presented two
sets of indicators (wherever applicable)—including VIL and excluding VIL.
! Sales Realisations
The trend in the sales realisations on CTVs witnessed a decline during FY1999 and FY2000, followed by a
rise in FY2001 and FY2002. The decline in the initial years was indicative of the increased competition

following the entry of multinational players. Right from the outset, the new entrants adopted aggressive
marketing strategies (including customer-friendly exchange schemes) and the established players initially
tried to counter them by adopting a price-cutting strategy. Exchange schemes became a favourite
marketing tool with all the players from FY1997 onwards, which also added to the lowering of sales
realisations. The price reductions were supported by the reduction of excise duties from 20% to 16% over
the period FY1997 to FY1999. However, since FY2001, price took a back seat with the players trying to
differentiate on premium models, which were both technologically and aesthetically superior. Such efforts
included the launch of flat television models by many players. The growth in the market for large screen
(above 21”) has also contributed to the increase in price realisations.
Figure 37: Trends in CTV’s Average Sales Realisations
10,200 10,159
Rs. per unit
10,000
9,859
9,800
9,600
9,408 9,448
9,400 9,326
9,200 9,149
9,000
8,800
8,600
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
Sales realisations on B&W TVs have registered a decline over the past few years, with demand for the
product dropping continually. However, realisations improved during FY2002, because of the imposition of
excise duty.
Figure 38: Trends in B&W TV’s Average Sales Realisations
3,600 Rs. per unit 3,555

3,353 3,262 3,320
3,200 2,923
3,121
2,800
2,400
2,000
1,600
1,200
800
400
0
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
Realisations on VCRs/VCPs have dropped sharply over the last decade in line with the rapid shrinkage of
the market. At present, the products constitute a small portion of the consumer electronics sector. New
video products like VCD players and DVD players are only recent entrants, and hence no trends are
available for them.

Figure 39: Trends in VCRs/VCPs Average Sales Realisations
4,400 4,345 Rs. per unit

4,000 3,839
3,600 3,261
3,200 3,066
2,800 2,585
2,400 2,233
2,000
1,600
1,200
800
400
0
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
In audio products, on the whole, sales realisations have increased over the period FY1997 to FY2002,
which is indicative of the trend towards higher-end audio products. The demand for music systems has
increased at the cost of smaller monos and stereos. During the last three years, within the music systems
segment itself, there has been a movement towards premium models in terms of product features like VCD
player function.
Figure 40: Trends in Audio Products Average Sales Realisations
2,000 Rs. per unit

1,690
1,600 1,537
1,328 1,409
1,292 1,240
1,200
800
400
0
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
! Margins
The operating margins for the Indian consumer electronics sector showed a rising trend over the period
FY1996 to FY2000. However, the operating margins declined sharply during FY2001, before recovering
during FY2002.
Figure 41: Trends in Consolidated Operating Margins—Consumer Electronics
Incl. VIL Excl. VIL

12%
10.9% 11.0% 10.6%
10%
9.3%
8% 8.1% 8.3% 8.3% 8.3% 8.0%
7.1%
6% 6.1%
4%
2%
0%
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002

The operating margin rose sharply in FY1998 mainly because of the reduction in excise duties both on the
end-products (CTVs and audio products) and on most electronic components (CPTs, deflection yokes,
tuners, magnetic heads, tape deck mechanism, etc.) from 20% to 18%. Moreover, the selling costs did not
increase in tandem with the sales, with the established players like BPL and Videocon being able to
leverage on their brand presence. The operating margin remained at 10.6-11% during FY1998 to FY2000.
However, operating margins declined sharply during FY2001 because of negative sales growth, increase in
prices of CPTs, and less than proportional decline in raw material & selling cost. An increase in raw
material cost (from 72.9% of operating income during FY2000 to 73.7% during FY2001) and selling,
general & administrative cost (12.8% to 13.3%) resulted in a lower decline in cost of sales. As a result,
operating margins declined from 10.6% during FY2000 to 9.3% during FY2001. Operating margins
improved during FY2002 because of decline in raw material and employee costs.
Table 10: Trends in Operating Costs for Consumer Electronics Manufacturers

Percent of operating income
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
Incl. VIL
Raw Material 73.4% 70.6% 73.1% 72.9% 73.7%
Employee 3.7% 3.6% 3.3% 3.4% 3.6%
Selling, General & Admn. 14.0% 13.1% 12.4% 12.8% 13.3%
Excl. VIL
Raw Material 74.6% 72.7% 74.9% 74.0% 74.7% 70.4%
Employee 4.7% 4.4% 4.1% 4.5% 5.1% 5.4%
Selling, General & Admn. 12.8% 12.8% 12.0% 12.3% 13.8% 13.2%
During FY2002, in spite of a decline in net sales (excluding VIL, net sales declined 6.6% during FY2002,
compared with a decline of 11.4% during FY2001), operating margins improved because of decline in raw
material costs (especially for picture tubes), and lower selling & administrative expenses. As a result,
operating margins of consumer electronics manufacturers (excluding VIL) improved from 6.1% during
FY2001 to 8% during FY2002.
Figure 42: Trends in Consolidated Net Margins—Consumer Electronics
Incl. VIL Excl. VIL

6%
5%
4% 3.9% 4.1%
3.6%
3% 2.9% 3.0% 3.6% 3.1%
2.4%
2% 1.9% 1.7%
1% 1.1%
0%
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
In spite of stable operating margins during FY1998 to FY2000, net margins had shown a rising trend
because of lower interest costs. However, net margins declined sharply during FY2001 because of lower
operating margins, and higher interest and depreciation costs (because of capacity expansions). While net
profits of the companies in our sample declined 27.9% during FY2001 to Rs. 2,307 million, their net margin
declined from 4.1% during FY2000 to 3.1% during FY2001. During FY2002, in spite of improved operating
margins, net margins have declined because of higher interest and depreciation costs, and costs incurred
on business restructuring (including voluntary retirement schemes). Excluding VIL, while the net profit of
the companies in our sample declined 39.6% during FY2002, their net margins declined from 1.7% during
FY2001 to 1.1% during FY2002.

Figure 43: Trends in Interest Costs—Consumer Electronics

Incl. VIL Excl. VIL

6%
5%
4% 4.2% 4.0% 4.0% 4.0%
3.5% 3.3%
3% 3.1% 2.9%
2.8%
3.4%
2% 2.6%
1%
0%
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
The interest costs increased because of the funding of capacity expansions. Depreciation costs have also
increased because of capital expenditure on capacity expansions.
Figure 44: Trends in Depreciation Costs—Consumer Electronics

Incl. VIL Excl. VIL

6%
5%
4%
3%
2.3% 2.6% 2.5%
2.3% 2.3%
2% 1.8% 2.2%
1.8% 1.8%
2.0% 1.9%
1%
0%
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
Although there has been significant capacity expansion in the consumer electronics industry, the debt
equity ratio has moved in a narrow range over the last five years. In spite of lower net margins during
FY2001, the debt equity ratio had declined because of capital infusions and debt prepayments. During
FY2002, the debt equity ratio declined because of debt repayments.
Figure 45: Consolidated Debt-Equity Ratio—Consumer Electronics
Incl. VIL Excl. VIL
1.5
1.3
1.3
1.1 1.2
1.1 1.1 1.1
1.1 1.1 1.1 1.1
1.0
0.9 0.9
0.7
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002

! Cost Structure
Table 11: Average Cost Structure–Consumer Electronics
Percent of operating costs

FY1997 FY1998 FY1999 FY2000 FY2001
Raw Material 79.9% 79.2% 82.1% 81.6% 81.3%
Employee 4.1% 4.0% 3.8% 3.8% 3.9%
Selling, General & Admn. 15.2% 14.7% 13.9% 14.4% 14.7%
Other 0.8% 2.1% 0.3% 0.2% 0.0%
For the consumer electronics sector, the material costs came down from FY1996 to FY1998, following the
reduction in the duty rates on components, as mentioned above. However, for the last three years, the
focus of the market has shifted to differentiation on the basis of product features and technology, resulting
in the rise in material costs, as a proportion of operating costs. During FY1999 and FY2000, there was a
drop in the consolidated selling cost (as a proportion of operating cost). This can be explained mainly by
the reduction in proportional selling expenses by the more established companies like BPL and Videocon,
who have a higher weightage in the sample considered. However, selling costs have increased during
FY2001 and FY2002, as competition has identified and the established player—BPL, Videocon, Philips and
Mirc—face increased competition from new entrants such as LG and Samsung.
Figure 46: Trends in Selling & Administration Costs—Major Companies

Percent of operating costs
20%
18%
16%
14%
12%
10%
8%
6%
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
BPL Kalyani Sharp
Matsushita Mirc
Philips Videocon International Ltd.
! Returns
Figure 47: Consolidated ROCE–Consumer Electronics
Incl. VIL Excl. VIL

20%
18% 17.1% 17.5%
16%
14% 14.4% 13.9% 14.5%
13.6%
12% 15.3%
16.1% 10.8%
10%
8% 9.8% 7.7%
6%
4%
2%
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002

The return on capital employed (ROCE) for the consumer electronics sector had dropped in FY1997,
because of both an increase in depreciation—owing to capital investment in plant and machinery—as well
as an increase in debt to finance capacity installation or expansion projects. However, it rose between
FY1998 and FY2000, with the increase in operating margins more than offsetting the effects of increased
depreciation and debt. The ROCE declined during FY2001 and FY2002, because of declining margins.
! Asset Turnover
Figure 48: Consolidated Asset Turnover—Consumer Electronics
Incl. VIL Excl. VIL
2.0
1.7 1.8 1.7
1.6
1.5 1.4
1.3 1.3 1.2 1.3 1.3
1.1
1.0
0.5
0.0
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002
The asset turnover ratio of the consumer electronics sector remained stable during FY1997 to FY2000, but
declined during FY2001 and FY2002, with the additions to assets occurring faster than the increase in
sales. For instance, BPL’s asset turnover ratio declined from 1.7 in FY1998 to 0.7 in FY2002. BPL’s asset
turnover declined from 1.03 in FY2001, mainly because of lower sales, higher receivables, and significant
addition to gross block. Videocon International Ltd., which has one of the lowest asset turnovers in the
industry, has however reported a stable asset turnover, at 0.8-0.9, between FY1997 and FY2001. Philips
has amongst the highest asset turnovers in the industry—at 2.5 during FY2002. Its ratio improved
significantly during FY2002 because of better working capital management. Better working capital
management also enabled Mirc to report improved asset turnover during FY2002.
! Working Capital Cycle

Over the period FY1996 to FY1999, the consolidated inventory days level for the consumer electronics
sector as a whole came has come down almost continually, with most of the players taking special
initiatives towards improving logistics and distribution processes. However, the movement in receivables
days has shown an irregular trend. However, of late, there has been a policy on the part of consumer
electronics companies to assist the dealers in estimating their sales and in the management of their stock
levels, and time of reordering, etc. In addition, many companies have introduced information technology
(IT)-enabled systems to provide networking with the dealers, leading to streamlining of dealer operations.
Figure 49: Consolidated Working Capital Ratios—Consumer Electronics
Receivables Inventory Creditors

80
70 70
65 64 66
60 58 58 60 58
53 52 54 55
50 46 43 45
40
30
20
10
0
FY1998 FY1999 FY2000 FY2001 FY2002

PROSPECTS
The Indian consumer market is highly heterogeneous in nature. Thus, while on the one hand, newer,
technologically superior, premium-end products are catching the imagination of buyers in the high-income
segment, on the other, the penetration level of even older out-of-date products like B&W TVs is quite low in
lower income households. It is estimated that, as of today, there are close to 115 million households in the
country, which do not have a B&W TV. While the high and medium-to-high income households would go in
for a direct purchase of a CTV, for the lower, lower middle, and a sizeable section of the middle income
households, a CTV is almost always an upgrade over an existing B&W TV. Although the price difference
between a 14” B&W TV and a 14” CTV has reduced over the years, it still is significantly high for these
households to go in for a first purchase of a CTV. Thus, it may be argued that there is still a sizeable
potential for B&W TVs in India. Historically speaking, it may be seen that the demand for B&W TVs started
shrinking in the late 1980s with the advent of CTVs. However, with the Government exempting B&W TVs
from excise in FY1994, the offtake of B&W TVs picked up once again. During the last three years, the
demand for B&W TVs has started declining again, in particular after the Government imposed excise duty
on B&W TVs—from 0% to 4% in Union Budget for FY2002, and from 4% to 8% in the Union Budget for
FY2003. The Government increased the excise rates on important components like B&W PTs from 13% to
16% in the Union Budget for FY2000. The upshot of this has been an increase in the presence of the
unorganised sector, who are able to price their products cheaper by not paying any duties.
The likely future trends in the domestic markets for CTVs and B&W TVs are compared below:
Figure 50: Future Trends in CTV and B&W TV Markets

Million units
9 CTVs
8 B&W TVs
7
6
5
4
3
2
1
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
It may be mentioned that even in developed countries like the UK, the displacement of B&W TVs took a
fairly long time. Even in 1987, about 20 years after the introduction of CTVs in the UK, around 8.5 million
monochrome sets remained in use.
The CTV market in India, which has exhibited high growth rates in the past, stagnated during FY2002. The
deceleration in the growth has been attributed to the fact that the market grew in FY2000 and FY2001,
because of potent drivers like the cricket World Cup in 1999. The typical buying behaviour for CTVs is that
the purchase coincides with some major events, especially sporting extravaganzas. In 1996 and 1999, the
motivating factor was the cricket World Cup, while in 1998, it was the football World Cup that saw a spurt in
CTV demand even in traditionally low-selling areas like West Bengal and Kerala. The market stagnation in
FY2001 can be attributed mainly to the absence of major events. The Olympics did not elicit as much craze
in India as the cricketing events. After the stagnation during FY2001 and FY2002, the market has again
picked up during FY2003, mainly because of the football World Cup. In the first quarter of FY2003, CTV
sales were estimated at 1.6 million, nearly 45% higher than during the first quarter of FY2002. Because of
the festival season, CTV sales were nearly 1 million during October 2002. Sales during FY2003 are
expected to increase 20% to an estimated 7 million CTVs, mainly because of the football and cricket World
Cups.
Within the overall CTV sector, as indicated earlier, there has been a movement from the middle screen size
segment to the flanges—both the large screen end (catering to the higher income classes) and the small
screen (14”) end (catering to the economy segment). This trend is likely to continue in future. In addition,
the CTV sector has also moved towards improved models, in terms of picture and sound quality. In line
with the growth in the global flat TVs market, the market for flat TVs grew from a low base of 20,000 units in

CY1999 to 70,000 in CY2000, and CY215,000 units in 2001. As a percentage of the total CTV market, the
market for flat TVs was 3.7% during CY2001, compared with 1.2% in CY2000. Currently, the high prices of
flat TVs pose a deterrent to their growth in the extremely price-sensitive Indian market. However, with the
reduction of import duties on CPTs, the prices on flat TVs are likely to come down in future, spurring
demand. The price differential between flat TVs and conventional TVs has also been narrowing. The price
differential is expected to shrink further with the implementation of projects for manufacturing CPTs for flat
TVs in the country.
As indicated earlier, the global market trend in the accessory video equipment has been a shift from the
analog devices like VCRs towards digital products like VCD players and DVD players. Within the digital
product segments, the global demand is now rapidly moving from VCD players to DVD players. Of late, the
introduction of these new gadgets has drawn a positive response from the Indian market. However, the
growth prospects are marred by a number of bottlenecks. The predominant hurdle is the affordability issue,
with the prices of these gadgets being so high that only the rich households can afford them. Apart from the
higher prices, demand for DVD players is also affected by the Regional Coding System, whereby the world
has been divided into six different zones and DVD software has to be programmed to each zone to be
marketed in that area. This limits the availability of software in the areas concerned. For instance, India falls
under zone five along with Russia and Africa, and the interest levels in these zones will be the lowest as
the main markets are the US, Europe and Japan1. According to TV Veopar Journal, the VCD player market
(organised and grey combined), which had reached a level of 180,000 units per annum in CY2000, has
expanded to CY650,000 units in 2001, and is likely to have exceeded 1 million units in CY2002. The DVD
player market (organised and grey combined), has also increased from 25,000 units in CY2000 to 30,000
units in CY2001. However, some optimists are bullish about the take-off of DVD players in India, if not in
the near future, at a later time. The main reasons cited are the high storage capacity as well as the
impressive picture and sound quality available on DVDs. Moreover, DVD players are backward compatible
inasmuch as both audio and video CDs can be played on them. The number of titles available on DVDs,
though low at present, is increasing at a rapid pace. Several Indian companies like T-Series, Eros
International and Ultra Video, which hold video rights for films, are now offering the same titles on DVDs.
Although the prices of DVD players have not dropped appreciably, those of the DVD software have
declined rapidly.
The key factor driving the growth of the audio equipment industry is the rapid growth in the Indian music
industry. The trend visible in the audio products market—substitution of low-end audio products like the
mono and stereo radio recorders by hi-fidelity systems—is likely to continue in future. With the advent of
CDs, CD-based systems are likely to gain popularity at the cost of systems without CDs. In addition, within
the higher end, the Indian market might see a movement towards micro systems, which are more compact
and yield better sound quality. There is a possibility of a replacement market emerging to take care of
product obsolescence whereby the older products can be bought by companies in exchange for the newer
innovations, and supplied to the low-penetration rural areas.
One of the major concerns for the established audio industry is the growth of the MP3 concept, by which
music can be downloaded from the Internet, stored and transferred. With the increase in Net-
consciousness among urban households, especially with the drop in Internet charges, its popularity is likely
to increase further. Although MP3 CDs are costlier than cassettes, they are cheaper as compared with
conventional CDs and store eight times the number of songs than either of them. In addition, MP3 CDs are
also available in the grey market. These are predominantly smuggled from countries like Thailand and
Malaysia. While the PC was a cumbersome, non-portable hardware to play MP3 files, the advent of the
light, compact and portable MP3 player has made it more convenient for the listener. The growth of MP3
players is likely to directly affect the portable audio segment, most importantly, the headphone stereo
(walkman) segment.
The common trend being witnessed among all consumer electronics products segments has been a
movement towards higher end premium models. This has been facilitated by the entry of multinational
players, who, after having successfully launched their products abroad, have been keen to introduce them
in India. The first generation of multinationals consisted of predominantly Japanese names like Sony, Akai
and Aiwa, who established their presence through value-added features. Among the first-generation
1 Regional Coding System can be used to prevent the playback of certain discs depending upon the
geographical area it is played in. The system enables control over export of DVD titles to various countries.
For example, while a recent film may already have played theatrically in the US and been released to the
US video market, that same film may not yet have opened in some European or Asian countries. However,
the regional coding system is entirely optional, and discs without Regional Codes will play on any player in
any country.

Japanese players, Akai and Aiwa followed a strategy of using the distribution network of entrenched
players (Videocon and Baron International, respectively), while Sony chose to go alone, probably because
its positioning as a global quality leader could get diluted in the event of a tie-up with any Indian player. The
second-generation multinationals were the Korean companies, LG and Samsung, who sought to storm the
market all by themselves with a rapid launch of a slew of products simultaneously across different
segments. The most recent entrants into the Indian consumer electronics market are the Chinese players,
who are setting new benchmarks in price leadership through their inexpensive product lines, endangering
the dominance in the low price segments of established Indian players like Videocon, and to some extent,
even the unbranded players. The predominant core competence of Chinese players is their low
manufacturing cost, owing to, among other factors, enormous economies of scale, which is supplemented
by an overwhelming financial and non-financial support from the Chinese government for the electronics
sector. Konka and TCL are two major Chinese electronics players who flagged off the entry of the third
generation of multinationals in India, and many other Chinese companies, notably Haier, are also lined up.
The future market-place for consumer electronics could see the higher end occupied by the premium
brands differentiating themselves on quality like Sony and Panasonic, and the lower price-sensitive
segment by the Chinese brands. On the other hand, the other players, including other multinationals and
the older players of Indian origin, are likely to develop a product range across all price segments, suitably
sub-branded, so that even while following the middle road, they can pose significant competition at the
ends as well.
Two issues are of paramount importance for the Indian consumer electronics sector of today. One is the
preponderance of the grey market consisting of either smuggled electronic goods or dumped second-hand
and counterfeit electronic goods, mostly of Chinese origin. The other issue concerns the prospects of the
indigenous electronic components industry, which has been plagued by fragmentation and lack of
economies of scale. Most of the players are small-scale, unorganised players, who have owed their
existence to the privileges rendered by the Government to the small-scale industries (SSI) sector. The
ceilings on investments in plant and machinery have dissuaded the small-scale units to modernise. On the
other hand, after the opening up of the electronics sector and entry of multinationals with products
incorporating state-of-the-art technology, the component industry finds itself out-of-date. Although some of
the companies have managed to become original equipment manufacturers (OEMs) for the bigger
domestic and international players, the majority has lagged and now find their business unviable.

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CONSUMER DURABLES

ICRA Sector Research

ICRA Information Services

INDI AN CONSUMER ELECTRONICS

TELEVISION PRODUCTS ................................................................................................................................ 2

Analyst: Vineet Nigam

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Black & White Televisions

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Figure 1: Trend in Domestic B&W TV Market Size

6.5 million units

Compiled by ICRA Information Services

per 1000 households

0 50 100 150 200 250 300

Source: National Council of Applied Economic Research (NCAER)

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Figure 3: Household Penetration of B&W TVs in India—Urban and ural

300 Urban per 1000 households

Figure 4: Size-wise segmentation of the B&W TV Market—2001

Source: TV Veopar Journal

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Figure 5: Trends in TV Production in India

Source: Electronics Industry Information System

Figure 6: B&W TV Market Shares—CY2001

Source: TV Veopar Journal

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30% 2.5% 1.3%

20% 38.3% 38.3% 12.6%

Source: Japan Economic Foundation

Figure 8: Segment-wise Trend in Global CTV Demand

Source: TV Veopar Journal

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! Domestic Market Size and Growth

Figure 9: Growth Trends in Domestic CTV Market

7 Market Size million 45%

Compiled by ICRA Information Services

Figure 10: Segment-wise Growth Trend in Domestic CTV Market

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Table 1: Segment-wise Growth Rates in CTVs--FY1996 to CY2001

Figure 11: Overall Penetration Levels of CTVs (per 1000 households)

per 1000 households

0 20 40 60 80 100 120 140 160

Figure 12: Household Penetration Levels of CTVs--Urban and Rural

400 Urban 350.0

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! Geographical Demand Distribution

Figure 13: Penetration of CTVs across regions

0% 5% 10% 15% 20% 25%

Source: TV Veopar Journal

Figure 14: Penetration of CTVs--Across States and Population Centres

Tamil Nadu 20.0

Karnataka 16.7 30 57.1

Assam 10.9 10 22.9

Madhya Pradesh 9.3

Rajasthan 8.3 0 5.0

Uttar Pradesh 6.3

Source: TV Veopar Journal

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Figure 15: CTV Market Shares—CY2001 and CY1999

Source: TV Veopar Journal

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Table 2: Installed Capacities of CTV manufacturers in India

! Profiles of Major Players