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FALL OF BPL REPORT.docx

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Summary
 PGDM 2022-2024

MICROECONOMICS
2

A PROJECT REPORT
On
Fall of BPL Electronics: Microeconomic Factors

SUBMITTED TO:
Dr. Venkatraja B
Associate Professor, SDMIM

SUBMITTED BY:
Sushmitha M 22735
Trisha L 22736
Tushar Nag R N 22737
Uday R H 22738
Vibha B U 22739
Yashwanth A C 22740
Contents
HISTORY .............................................................................................................................................. 1
VISION OF BPL ................................................................................................................................... 1
MISSION OF BPL ................................................................................................................................ 1
TIMELINE OF BPL ............................................................................................................................. 2
Financials of BPL .................................................................................................................................. 4
Joint Venture with Sanyo ..................................................................................................................... 5
SWOT ANALYSIS OF BPL ................................................................................................................ 6
Strength of BPL................................................................................................................................. 6
Weakness of BPL .............................................................................................................................. 6
Opportunities for BPL ...................................................................................................................... 6
Threats for BPL ................................................................................................................................ 7
Factors affecting the fall of BPL .......................................................................................................... 7
BPL’s stand pre NEP, after liberalization, and now.......................................................................... 8
FALL OF BPL....................................................................................................................................... 9
Fail of BPL-Sanyo Joint Venture ...................................................................................................... 10
Conclusion / Managerial Implications: ............................................................................................. 11
REFERENCE ...................................................................................................................................... 12
Acknowledgment:
We would like to use this occasion to express our gratitude to everyone who assisted and
encouraged us over the course of the project as we present the project report on "Fall of BPL
Electronics: Microeconomics reasons."

We would like to show our gratitude to Dr. Venkatraja B., Associate Professor, who is serving
as our project's advisor, for his tremendous support, assistance, and advice, without which this
research could not have been completed.

Thanks to all the teamwork that made it possible, this project helped us grasp and expand our
expertise. A project just shows the finished product, but behind it, there was assistance,
direction, and support from all the well-wishers, all of whom we are grateful.
HISTORY
2
T P G Nambiar, a member of the BPL group, supported BPL when it was incorporated in 1963.
2
BPL Display Devices, BPL Soft Energy Systems, and Bharat Energy Ventures are some of its
subsidiaries. Electronic Research BPL Systems and Projects are among the additional group
companies. Dynamic Electronics BPL Sanyo, etc. It has production plants at Doddaballapur,
Palakad, Bangalore, and Noida. In March 1994, the company released a public issue.
2
Televisions, test and measurement equipment, medical electronic equipment, and office
automation systems are among the things that BPL manufactures. The company has expanded
its product line thanks to the technological partnership with Sanyo Japan, making it a
formidable contender in the Indian electronics market. The BZT’s reputation for export to
Germany has only ever been given to BPL.
2
BPL has been chosen by Nokia Phones as its local distributor in India. It received the Certificate
of Merit from the Export Promotion Council in 1995–1996 for outstanding consumer
electronics export performance. With technical assistance from Sanyo Japan, the business
2
successfully finished an export-focused project for the production of alkaline batteries in the
2
Dobaspet Tumkur region of Karnataka from 1996–1997 at a cost of Rs 120 crore. One of the
company's subsidiaries, BPL Automation, merged with the company in 1998-99. The
2
corporation gains from the merger in terms of having more control over the activities of the
tool room and plastic moulding divisions. BPL is the first television company in India to reach
one million subscribers (sales in volume).

VISION OF BPL:
To make BPL a household name.

The founder K.P.P Nambiar wanted to contribute to Indian society in one or the other way.

So, he set up BPL and started manufacturing electronics.

MISSION OF BPL:
The focus of the mission is on importing technology, enhancing product quality, innovating,
and producing electronic items that improve quality of life.

1
TIMELINE OF BPL

4
 In 1963 - TPG Nambiar became the company's promoter when it was incorporated as a private
8
limited company. The company manufactures electronic test and measuring instruments,
electro-medical instruments, electro cardio graft patient monitoring systems, color and black-
and-white television receivers, video cassette recorders, and plain paper copiers, among other
1
items. It was promoted through technical and financial collaboration with BPL Instruments Ltd.
in the United Kingdom
4
 1979: The production of plain paper copiers in technical collaboration with Gestaner UK
received permission. Later, in technical collaboration with Sanyo, Japan, improved, cutting-
edge plain paper copiers were made available.
 In 1982: The business expanded into a variety of consumer electronics, including video cassette
1
recorders, color television receivers, black-and-white television receivers, and so on. The
products are sold under the label "BPL."
1
 1994 - 176,00,000 No.of promoter-owned equity shares. The company offered 82,000,000 No.
in March 1994.of equity shares valued at Rs 10 each in exchange for a predetermined sum of
1
cash. of Rs. 105 per share in the form of (i) according to a set allocation:75,000 shares to
promoters, directors, friends, and other individuals; (ii) 100,000 shares to SCICI, UTI, and
ICICI. Employees were given preferential allocations of another 2,00,000 shares. Only
4
1,97,600 shares were purchased. Balance: 2,400 shares that were not taken by employees and
1
69,25,000 shares issued to the public. Additionally, on a firm allotment basis, 9,00,000 shares
were issued to FIIs at a premium of Rs 155 per share.
4
 1995: The company started working on an export-focused project to make alkaline batteries.
 In 1996: the company started a project to make environmentally friendly alkaline batteries for
1
export. A new location in Dobaspet, Tumkur District, Karnataka, is being used to set up a
cutting-edge, fully automated production facility.
1
 1997: The company has two subsidiaries: BPL Automatics Ltd. and UPTRON Colour Picture
Tubes Ltd.
1
 1998: BPL and the Andhra Pradesh State Electricity Board previously signed a revised PPA in
October 1994. The project's commissioning date has been established for July 2000.
1
 In 1999: In Tamil Nadu, BPL Mobile introduces the mobile on-the-spot prepaid card with over-
1
the-air customization Interactive voice response, computer telephony, and call center
1
applications are the goals of a joint strategic initiative between the consumer electronics giant
BPL and Microsoft, Corporation India Pvt Ltd.

2
 1
 In 2000: BPL announced the launch of its online business, bplnet.com. It will be offered by the
group's company, BPL Innovision, the internet business and information technology arm of the
group.
4 1
 2001: Launches an "e" initiative with the intention of expanding into a larger business.BPL
Mobile has introduced MobileSelect, an innovative product aimed at the premium user
segment, in conjunction with the government's announcement that licenses will be granted to
the fourth cellular operator.
1
 2002: The BPL home appliances division enlisted Ambit Finance Ltd. as its sole strategic and
financial advisor for its restructuring. With the introduction of its new models, the division
1
introduced innovative Direct Cool Fridges aimed at the mass market DC segment. BPL
introduced the market to its new pretty roaming products.
1
 2003: A conditional interim order was issued by the city civil judge in Bangalore. Mr. M Sasi
has been appointed Director (Finance & Corporate Planning) of the business without
compensation, effective immediately for a period of two years.
1
 2005: -Delivered laptops under the BPL brand and is expected to expand by 50% this year
9
 Delisting of equity shares from the Delhi Stock Exchange Association Ltd. (DSE) with effect
from 2005 March 31,
1
 -BPL and its associates sign a memorandum of understanding with Eveready Industries -BPL
collaborates with Sanyo on the CTV venture
1
 In 2009: BPL Healthcare and Welch Allyn, a leading global manufacturer of frontline medical
products and solutions, formed a partnership to make it simple for Indian physicians, hospitals,
1
and the public health system as a whole to access cutting-edge products, world-class service,
and customized training programs.
 2011: Mr. The position of Company Secretary and Compliance Officer has been given to
Srinath Maniyal M.-The distribution of Rs. 1,69,58,682 worth of preference shares at 0.001 per
share100/- each.
1
 2012: saw the payment of a dividend of Rs.0.001 per share) on a total of Rs.100/- each.
 2017: BPL will sell its products through a partnership with Amazon.

3
Financials of BPL:

The BPL Group's annual revenue from 2005 to 2009 is listed below. We can observe that the
revenue started to gradually decrease, demonstrating the company's subpar financial
performance.

Total Revenue
400
350
300
250
200
150
100
50
0
2005 2006 2007 2008 2009

Total Revenue of BPL Group

The BPL Group's profit or loss for the years 2005 through 2009 is shown below. Up until 2009,
they had routinely failed to turn a profit throughout these years.

Profit/Loss
50
0
2005 2006 2007 2008 2009
-50
-100
-150
-200
-250
-300
-350

Profit/Loss of BPL Group

4
Joint Venture with Sanyo:

A joint venture between BPL and Sanyo of Japan was created in 1963 to produce the video
Deck mechanism and other crucial components for video cassette recorders (Pandey, 2013).
Sanyo Electric Works was established in 1947 in Osaka, Japan. Making bicycle generator
lamps was its initial endeavor. In 1950, it adopted the name Sanyo Electric Co. Ltd. They began
making televisions in 1953. In 1982, SECL and BPL began working together formally. BPL
started making a variety of products in 1984, including as black-and-white televisions and
video cassette recorders. BPL has also received many technologies from SECL. The combined
venture represented a development in the histories of the two businesses. Over the course of
their relationship, which began in the early 1980s, BPL and SECL both experienced major
changes in their financial situations. In the late 1990s and early 2000s, BPL, with technological
assistance from SECL, dominated a number of sectors in the Indian consumer electronics and
home appliance market (ICMR, 2006). Sanyo India Pvt Ltd, a branch of Sanyo Electric Co Ltd,
and the BPL Group officially launched their joint venture in 2004. They started out by making
CRTs, Plasmas, and LCDs in 2005. But by 2003, BPL was facing significant financial
problems. SECL also suffered record losses in 2004 and 2005 and was on the verge of going
out of business as a result of the fierce competition in the global electronics industry. BPL
began a debt management experiment in which it sold off "non-core" operations and removed
high-risk debt. SECL has started a turnaround initiative with the goal of focusing on developing
markets, environmentally friendly products, etc. The partners were upbeat about their chances
even though Sanyo BPL would compete in an industry that had seen substantial changes over
the past five years. According to research conducted by the company, consumers still thought
the BPL brand was trustworthy but believed it had lost its position as the industry leader
because it had fallen behind in technology (ICMR, 2006). After the Sanyo BPL venture in May
2007, the rate of attribution was 70%. Therefore, BPL focused only on the Healthcare Business
Group, which manufactures its own electro medical equipment, including electrocardiography
devices and patient monitors, and has a well-established nationwide distribution and servicing
network.

5
 SWOT ANALYSIS OF BPL:
Strength of BPL:
6
The important elements of BPL's business that provide it a competitive edge in the market are
examined by looking at its strengths. Having a strong financial position, an experienced personnel,
unique products, and intangible assets like brand value are some key aspects of a brand's strengths.

 It was listed among India's top 100 most reliable brands.

 Joined with Sanyo to transfer technology and produce CTVs.
 Strong brand with a history of producing innovative and well-liked TVs.
 Brand had effective print and TV commercial advertising.
 The full range of products includes audio equipment, televisions, refrigerators,
washing machines, and medical equipment.

Weakness of BPL:
3
A brand's weaknesses are aspects of its operations that might be enhanced to bolster its position.
Some weaknesses can be characterized as characteristics that the company lacks or in which the
rivalry excels. The following are the drawbacks of the BPL SWOT Analysis:
• When compared to worldwide companies, having an Indian brand result in a lower brand
perception
• The collapse was brought on by expansion into numerous unrelated fields.

Opportunities for BPL:

5
Any brand has the potential to improve in certain areas to grow its customer base. Opportunities for a
brand can include geographic expansion, product enhancements, improved communication, etc. The
opportunities in the BPL SWOT Analysis are as follows:

 The market for medical equipment is anticipated to expand each year in the foreseeable future.
 The tier-2,3 cities' growing market for consumer appliances.

6
 Threats for BPL:
7
Risks might come in the shape of things that could hurt a company's operations. Threats can
originate from several places, such as heightened rivalry, altering governmental agendas,
competing products or services, etc. The BPL SWOT Analysis revealed the following threats:
• Market share gains by foreign competitors from BPL's customers.
• Rapid technological advancement.
• The implementation of additional features by foreign competitors.

Factors affecting the fall of BPL:

Internal factors:

 Communication inside the family: The Senior Nambiar and his Son-in-law had a falling
out. The market significantly changed when BPL should have considered outside variables
instead of being caught up in legal fights. To assert ownership in 2004, Nambiar dragged
Rajeev Chandrasekhar, his son-in-law, who had successfully established his own business
from BPL Telecom.
 Financial changes and issues: BPL spent a lot of money on marketing campaigns that
didn't work.
 Suppliers: Due to superior offers and facilities from competitors' indirect sales channel
strategies, suppliers lost interest in BPL products.

External Factors:

 Competitors: Starting in the second half of the 1990s, South Korean rivals Samsung and
LGposed a severe threat to the corporation.
 Technology: Extreme market volatility was caused by rapid technological change cycles.
 Government: Following globalisation and privatisation (NEP), the local market became
accessible to foreign competitors.

7
BPLs stand pre NEP, after liberalization and now:

Pre NEP:
Before the liberalization, the competition in the field of Television market was very less.
The major 3 competitors for BPL was:
 Electronics Corporation (ECTV)
 Videocon
 Onida

Post NEP:
Scenario of Post LPG totally different as they were new entrants that were coming into the
market which brought in a lot of new technology, at a very low price, give lot of discounts
and benefits for the customers have customers as their priority.
The South Korean entrant had a very good offering for their customers, which gave good
durability which made customers shift from BPL to Samsung and LG.
The graphic shows that shares of BPL and other Indian businesses were progressively being e
aten away by shares of multinational brands, despite the fact that BPL was still the market lea
der in the late 1990s and early 2000s.

Market Share post NEP

25 21.9
20
15
11.2 10.9
10 6.3 6.3
4.1 5.1
5
0
BPL Videocon Onida Akai Philips Aiwa Samsung

8
Current scenario:
The current scenario shows the diversified brands in this industry:

Chart Title
35%
30%
25%
20%
15%
10%
5%
0%
Category 1

MI Samsung LG Sony Oneplus Others

FALL OF BPL:

Liberalization and Globalization of Indian Economy:

The Indian government said in 1991 that it would pursue an economic liberalization policy in
order to avoid payment issues and progressively integrate the Indian economy with the rest of
the world in order to attain a high rate of economic growth. We don't yet know if this swift
change in economic strategy a reflection of our leaders’ wisdom or from the World Bank and
the International Monetary Fund the consequence of pressure is to increase their loan offerings
in order to assist us in resolving the payment situation.

The Indian economy had to make various structural modifications in addition to environmental
changes. We might be the only economy in the world pursuing globalisation, liberalism, and
modernization all at once.

Shift from Monopoly to Monopolistic Competition:

9
As a result of deregulation and globalisation, BPL transitioned from being a monopoly to
monopolistic competition. The monopoly market it formerly had access to is no longer
available. Most brands had already been successful in entering the Indian market. As a result,
there were more vendors on the market, which contributed to the diversification of the goods.
Each company's products had unique characteristics, appearances, packaging, and even costs.
Due to their emphasis on altering the commodities, cutting costs, and having a global scope
and scale, multinational firms had a considerable edge. Both reasons lead to a decline in the
number of BPL clients.

Fail of BPL-Sanyo Joint Venture

BPL Group decided to join forces with Sanyo in a 50:50 joint venture. Sanyo served as BPL's
technical partner in the home appliance industry. Their relationship began in 1982. The
managing partner was a $20 billion Japanese corporation. However, Sanyo expected to hold a
dominant position in the alliance, which created instability in the partnership in 2002. The BPL
and Sanyo contract expired in 2004. But in 2005, they decided to try the initiative again in an
effort to regain the market share that had been lost. For Color TV, they collaborated with Sanyo
once more. Due to an earthquake that severely damaged Sanyo's semiconductor manufacturing
facilities in Japan, the Sanyo BPL failed once more. The venture's attrition rate increased to
70%. Panasonic eventually bought Sanyo.

Focus on Wrong Priorities

Given the severe competition BPL faced on the global market, focusing on the products was
vitally essential. They had to reinvent their products in order to stay ahead of the competition.
However, the internal family strife took precedence over the threats from the outside world. In
2004, Nambiar sued Rajeev Chandrasekhar, his legitimate son-in-law. He was utilizing the
money from BPL to fund BPL Telecom, his own business. Therefore, court cases took up the
time and focus required to handle the competition and advance the business.

Adapt to change in dynamics

Market alterations are typical. The needs and interests of customers are always changing.
Because of the rapid advancement of technology, innovation has emerged as the key to gaining

10
the loyalty of every customer. Customers were kept optimistic about continued product
improvement by the launch of new, cutting-edge products. BPL struggled to acclimatise to this
change. Customers preferred products with fresh ideas and innovative features, which BPL
quickly stopped selling.

 Lack of financial discipline:

The company started having significant financial problems in 2004 as a result of the intense
global competition in the electronics market. The acrimonious family dispute has had a
negative impact on the BPL Group's finances. As soon as BPL and Sanyo announced their joint
venture, BPL transferred its colour television operations to the new business. But when Sanyo
BPL failed, the company was unable to recover its losses. BPL attrition rate was close to 70%.

Conclusion / Managerial Implications:

 Family governance: In India, several family-owned companies are growing together.

The company must be open to all, much like Dabur, which has a family governance
structure. Absolute dominance, despotism, and possession never result in lasting
outcomes.

 Priorities: At the beginning of the technological revolution and the rising digitization,
BPL took part in domestic and legal issues. The commercial growth of this indigenous
brand was hampered by product variety, flash marketing strategies, and foreign
innovation. They were obsessed with internal problems rather than putting effort into
defending against competition from outside their major industry.

 Adapt to the shifting dynamics: While BPL excelled in the Japanese market, once the
new century approached, things changed dramatically, and the company was unable to
adjust. A business expands in size the more quickly it can change with the times.

 Unrelated Diversification: BPL entered the media communication, delicate energy, and
electronic parts sectors to diversify their market rather than only focus on one
business.

11
REFERENCE

12
 Similarity Report ID: oid:17335:24068536

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