Videocon: Rise from the

ashes
Presented by: Group 9
 Vision and Mission

To deliver and delight beyond expectation through ingenious strategy,

intrepid entrepreneurship, improved technology, innovative products,
insightful marketing and inspired thinking about the future
Videocon
• In 2017, Videocon
generated a revenue of
USD 1495 .43 mn and net
loss of USD 256.74 MN
• Videocon currently stands
2nd in the color TV segment
after LG
• In the early 2000s, the company launched a major expansion drive, diversifying from its
core business — consumer electronics — into a raft of sectors such as oil and gas,
telecom, retail and in DTH services.
• This massive diversification led to aggressive borrowing. Soon, debt began to pile. But
the company's capacity to pay off the debt started deteriorating over the years as the new
businesses were capital intensive and were not generating enough money
 Consumer durables
• The Videocon group began in 1955 when Nandlal Dhoot started a sugar mill by importing machinery
from Europe. In 1986, Nandlal’s three sons, Venugopal, Rajkumar, and Pradipkumar, started
Adhigam Trading, a firm selling paper tubes, which later expanded to the manufacturing of
television sets and washing machines.

• Its growth in the 1990s, when it added more products such as air conditioners, refrigerators, and
home entertainment systems, was synonymous with India’s liberalisation of its economy.

The group sells consumer

products like color
televisions, washing
machines, air
conditioners,
refrigerators, microwave
ovens and many other
home appliances,
through a multi-brand
strategy with the largest
sales and service
network in India.
Since the entry of Korean
Chaebols and their rising
popularity in the Indian The company continues
market, Videocon from a to do well in the washing
stand-point of market machine and refrigerator
leader has seen a slow segment.
decline to become a no.
3 player in India.
Why Videocon as a brand failed ?

• Consumers always tended to buy it for its price discount, rather than perhaps for it being
an attractive brand.
• Constant changes in positioning did not help. The brand went through a slew of changes
in the early years from “Bring home the leader” to “New improved life” to “Eco logic for
sustainable life” but none of them had a ring of a winner.
• Price warrior has a limited life because he will sacrifice long-term brand values for short-
term sales.
• By constantly pricing themselves 10-20% lower than the competition with the use of
cheap technology, they managed to hold double-digit market share in most of their
categories and were a constant threat to other international brands
• If they were careful about nine years ago they might have averted the bad situation they are in today. If
one looks at a piece of Videocon history from 2009-2014, you can tell that the company was headed for
an inevitable disaster.

• Videocon started off well with its large portfolio of brands like Sansui, Kelvinator, Electrolux Kenstar, in
addition to the marketing of Akai and Philips Televisions. But the Korean and Japanese brands quickly
overtook Videocon and made it no 4 in the market. This was largely due to Videocon’s emphasis on
price rather than quality and brand image.
Videocon Telecom
• In 2017 Videocon Telecom decided to venture into new
businesses, including retailing of CCTV cameras, smartphone
accessories, smart homes and city solutions and mobile VAS.

• Self-sustaining business lines was the company’s mantra while

selecting new business to venture into.

• All the business lines, be it existing, newly set up or upcoming,

first criteria was that the business should be cash positive from
the word go, and that the company should not have to burn any
money to make it run.

• VT although never recovered & in March 2018, CARE Ratings

qualified its ‘D’ rating on Videocon Telecommunications bank
facilities aggregating Rs 3,207 crore with the ‘issuer not co-
operating’ tag.

• Until Videocon launched its telecom services in 2010, the

company was profitable.
Oil & Gas Business
• In 2015 with investments in oil and gas blocks in countries such as Brazil, Indonesia, Australia and
East Timor, Dhoot aimed to turn Videocon from a largely consumer durables-driven firm to a global oil
and gas exploration and production company in the next three years.

• As India opened up its economy, it diversified into oil and gas in 1994 by signing a production sharing
contract for the RAVVA oil and gas field off Andhra Pradesh along India’s east coast. Dhoot later
acquired interests in oilfields in countries like Oman, Indonesia and Brazil, Mozambique and East
Timor, running overseas operations through a Cayman Islands subsidiary, Videocon Hydrocarbon
Holdings Ltd.

• What compounded the group’s woes was the end of the last oil boom. Videocon had acquired oil
interests globally as Brent crude prices kept surging for more than a decade, barring a blip after the
collapse of investment bank Lehman’s Brothers in 2008. The rally fizzled three years ago as demand
fell and output remained high. Since its last peak in 2014, Brent has declined by more than half to trade
at $48.
• Some 85% of its revenue comes from its consumer electronics business. In 2016, this
segment saw a 15% drop in income.. Mounting input costs are squeezing margins
even though demand is growing. The industry has also seen a shift from off-line to
online shopping.
• Meanwhile, Videocon’s crude oil and natural gas venture saw revenues dip by
39% mostly due to a glut in global oil prices
• It’s no longer viable to start producing crude at lower prices. At the end of December 2015,
Videocon’s energy unit had a debt worth Rs 19,073 crore. According to Dhoot, the segment’s debt is
equivalent to Rs 22,000-crore investments

• Revenues from the oil and gas business also dropped due to fall in global crude oil prices during
2015 to 2016.
.

• Videocon’s debt rose six-fold since its telecom foray in 2008 to over Rs 45,000 crore till December 2014,
according to a Credit Suisse report. The company sold its 10 percent interest in the Mozambique gas
project to Oil and Natural Gas Corporation Ltd. in 2013 for $2.4 billion to pare the burden. It also sold
majority stake in its direct-to-home business to Dish TV last November in a merger that will create one of
India's largest pay TV services provider. Still, the debt burden has fallen only marginally.
 SWOT Analysis

Strengths Weakness

• India’s leading brand of consumer • Increasing debt in the books of

electronics and home appliances Videocon due to expansion

• Huge presence in rural areas-70% • Cash flow from Investing activities

increased by 183.31%
• Multi-brand strategy

• Large sales and service network in

India

• Global network- Manufacturing sites

in India and plants in mainland
China, Italy and Mexico
 SWOT Analysis

Opportunities Threats

• Exports and new products in • Shift towards foreign brands

consumer electronics division
• Preference towards quality, value
• Expansion in Australia by and credibility than market leader
exporting air conditioners
• Increasing competition from
• Oil and Gas sector Korean markets
• Acquisitions in consumer
electronic segment
 Ansoff Matrix
PRODUCTS Increase in manufacturing air
Existing New conditioners from 40% to 75%

•Financial services such as insurance

MARKET PRODUCT •DTH services
Existing

PENETRATION DEVELOPMENT
STRATEGY STRATEGY •Acquired Thomson SA in 2005
MARKETS

•Manufacturing sites in India and plants

in mainland China, Italy and Mexico by
2015

MARKET •Australia- export air conditioners

DIVERSIFICATION
New

DEVELOPMENT
STRATEGY
STRATEGY •Oil and Gas business

•Power and telecom sector

•Insurance

•E-commerce

•Handsets

•DTH services
 BCG Matrix
RELATIVE MARKET SHARE
High Low
STARS QUESTION Consumer Durables
MARKS
MARKET GROWTH RATE
High

Telecommunication sector

D2h and Oil & Gas sector

Low

Financial services segment-

Insurance
CASH COWS DOGS
 PEST Analysis
Political Factors Economic Factors
•Anti-dumping duty on •Growth of retail sector
imported color pictures

E
•High investment in consumer

P
tubes durables
• Resolution by •Emergence of organizes retail
government to Reduce market leading to low prices and
carbon footprints increased variety
•Emergence of E-commerce
websites

S T
Technological
Social Factors
Factors
•Changing consumer
needs and preferences •Improved electricity
•Rural vs urban markets consumption
•Shift towards foreign •High quality products
brands •Changing technology