About Onida Company

Industry Profile

Indian consumer durables bazaar where the biggest changes have taken place since the economy was opened to foreign competition in 1991.With the forces of consumer demand unleashed, marketing became an all-important function. That is why advertising and marketing spends across the categories having seen a sharp jump. According to various estimates, advertising and promotion spends today range between 5 per cent to 10 per cent of the total sales.

The other significant change is the overall decline in prices across product categories. In CTVs, the drop has been a sharp 50 per cent. The prices were impacted by the sheer intensity of the competition. The leap in technology and feature-packed durables has given consumers a compelling reason to upgrade and replace their durables. While exploring new markets in the urban and rural areas, multinationals chose not to ignore the fast-growing replacement market. As a result, they also provided avenues for disposal of old products through innovative exchange schemes, which carried great-perceived value for customers in a society.

International fingerprints

Like every other segment of the consumer durables market, it was multinational competition that powered the metamorphosis in colour televisions (CTVs). Together multinationals have wrought signal changes in the consumer durables industry. In consumer electronics, Samsung showed a great deal of perseverance. But it was LG, which stole the limelight in its third coming.

The TV was no longer a price-driven status symbol but a feature – rich accessory. Prices, in fact, fell by as much as 40 per cent to 50 per cent I the past decade. In 1994-95, CTV manufacturers sold 1.35 lakh units and the market was growing at less than 20 per cent. Almost 80 per cent of the CTV market was made up of 20-inch and 21-inch sets. Penetration of CTV was low at less than 28 per cent and a huge population of black and white (B&W) televisions raised expectations about a possible explosion in the replacement market.

Multinationals made the most of it. They flooded the market with new- generation CTVs bristling with features, creating a compelling demand pull that not only saw the market grow, but also prices fall dramatically. For instance the price gap between B&W televisions and CTVs shrank substantially – from Rest 8,000 to less than Rest 4,000. This resulted in brisk replacement at the lower end of the market, a factor that also drove CTV sales.

Till the mid-nineties, TVs were still largely price driven, though branding was beginning to play a role. The Japanese brand, which was then being marketed by Mamba-based Baron International, introduced mouth-watering exchange offers that took the market by storm. The entry of multinationals created certain new products segments in the market. For instance, the 29-inch segment, which was virtually none existent five years ago, today constitute about 2 per cent of the total CTV market. Flat TVs form another segment that has come in to existence in the past three years and its contribution to the total CTV market stands at around 3 per cent. This is a segment where multinational brands like sony and Samsung clearly dominate. Also, increasing product parity has led marketers to look for differentiators other than technology --- looks, sound quality, strain-free viewing et al. While the total CTV market has crossed the five million mark.

A simple pointer to the fact is that while the GDP growth is estimated to be less than 5% for 2001-02, the number of CTVs increased by 7.2% in India. There are 79 million TV homes in India and 38 million Cable & Satellite (C&S) homes in India.
Today 60% of urban and 34% of rural TV sets have access to C&S channels. While the urban market has grown at the rate of 11%, rural market has grown at a tremendous rate of 53%. In a country of 1 billion, around 79 million households own TV sets, of which nearly 38 million households have cable connections.

The colour TV segment, which contributes over 60 percent of the turnover of the industry, has witnessed a growth of 25 percent over the previous year.

The total production of colour TVs was reported at 75 lakhs units during the year 2002-2003. Within this, the market for flat colour TVs has grown by about 100 per cent over the previous year.

More and more companies have introduced flat televisions, which are available with variety of features. During the year 2002-2003, production of flat CTVs is estimated at four lakh units.

The consumer durable sector has seen a production growth of 22.8% in the first two months of FY2001 as compared to the earlier 14.1% in the corresponding period last year. This indicates that an overcapacity situation prevails due to low volume off take. As per Ascon (Association Council of Confederation of Indian Industry), 100 out of the 125 industries surveyed posted moderate growth rate to high growth rate during FY2000, while the consumer durable industry (including CTVs, audio, cars, medium and commercial vehicles and personal computers) registered over 20% growth.

The industry has seen innovative changes in the marketing strategies adopted by multinational players who are now customizing their products to suit Indian needs and requirements. In fact, LG has named one of its brands as 'Sampoorna' to give an Indian feel to the product. Samsung's Metallica, which was launched globally a few months back, is customized with special features like 360 watts of power for Indians. Promotion strategies to lure customers continue to exist with some changes while on the other hand companies have seen their rural market strategies going awry, as the rural rich seem ready to pay a premium for a good product rather than buy a product with fewer features. The consumer financing options meant for the rural markets have found more takers in the urban markets.

The manufacturing of electronic items relate mainly to assembly line operations. Over the years, most of the local players have achieved a high degree of indigenization. For manufacturing a TV set, the most critical component is the picture tube. Black & white picture tubes are made in India while most manufacturers still need to import color picture tubes. The other important components include electronic circuit boards, tuners, high-tension transformers and molded plastic casings.

People in rural areas, who view CTVs as long-term investments, are found purchasing premium models directed at hi-end urban customers. This set of people is also keen on replacing their B&W TV sets with a new CTV. Industry experts expect sales of 10-11mn sets in FY2003 (CAGR of 19% for 3 years). However, even with the expected rise in sales, the problem of excess capacity will continue. This can be seen from the fact that the consumer durable production has grown by 22.8% in the first two months of the current fiscal as compared to the corresponding period last year.

Consequently, the growth rates of B&W TVs are set to decline. This segment will remain stagnant or may even face negative growth due to the customer’s shift towards CTVs due to lowering of the price differential. Moreover, the exchange schemes for CTVs have affected the B&W TV market.

The product ranges of Indian companies are limited to the 14-inch, 20-inch and 21 inch-1R, which cater mainly to domestic demand. Recently, there has been a shift in the demand from small and medium TVs to large and flat TVs, which require 30% more glass.

Expecting a boom in CTV sales, CPT (color picture tubes) manufacturers had invested heavily in expanding their capacities. With this, the total installed CPT capacity stands at around 6.75mn units in FY2000 while the CTV production is expected to be only 4.5mn sets. Indian players will have to export and concentrate on niche segments such as 14-inch CPTs to stay afloat.

The scenario is likely to get tough for CPT manufacturers as the import duties are expected to decline in future. The Colour Television Manufacturers Association (CETMA) has asked the major CPT makers to give in writing their consent to lower the customs duty on CPTs.

Colour glass shells which form a major raw material for CPTs (60% of raw material costs) are largely imported by the Indian manufacturers. Custom duties on colored glass shells have been coming down in successive budgets to stand at 16% in the FY2000 budget. Two domestic companies manufacture glass shells. These are Videocon Narmada Electronics and Hotline. The former has put up an Rs4bn plant in collaboration with Samsung in Bharuch for manufacture of CPTs. It has now been merged with Videocon International. Recently, the company has taken over a 3mn ton Russian CTV glass manufacturing facility from a German bank which will double Videocon's capacity from 3mn tons to 6mn tons.

Market Share – Company-wise

Companies	Market share (%)
BPL	20.3
Videocon	19
Onida	13
LG	11
Aiwa	10
Samsung	9
Philips	5.5
Sony	3
Sharp	3
Akai	2
Thomson	2
Others	2.2

The Indian market has seen a lot of action in the durables market over the past year--- battles have been fought with freebies, promos, discounts and exchange offers.

COMPANY PROFILE

Mr. G.L. Mirchandani and Mr. V.J. Mansukhani started MIRC Electronics in 1981 in Mumbai. The Company was set up in New Delhi in 1975 as a sister concern of Monica Electronics Ltd., which manufactured electronic watches and push-button dialers. Capitalizing on the Asian Games at New Delhi in 1982, MIRC started assembling television sets. Superior products and the combination of clever advertising and purposeful marketing soon ensured that Onida became a household name.

MIRC Today

The Onida brand, one of the most recognizable in India, has emerged as one of the premium names in the business for its sustained ability to introduce models that are futuristic and image enhancing for its buyers. MIRC is principally engaged in the design, branding, assembly and marketing of colour televisions. MIRC enjoys an installed capacity of 6 Lacs CTV sets per annum. MIRC is spread across India with 23 branch offices, 140 service centers and 35 godowns. MIRC is listed on the Mumbai, Bangalore, Kolkata, Dehli, Chennai, Ahmedabad and National Stock Exchanges. The company enjoyed a market capitalization of Rs. 284.70 Cr at the close of 2001-02, the highest in the Indian consumer durables industry (reference Capital Market magazine intelligent and pioneering application of technologies

The transition of MIRC Electronics from a family-owned business to a professionally managed company has largely been made possible by the vision of the Chairman & Managing Director, Mr. G.L. Mirchandani and Mr. Vijay Mansukhani .Mr G.L.Mirchandani, is an Engineer from BITs with more than 25 years of experience in electronic industry. He along with his team has reasons to believe that the story for TVs is not over yet

VISION STATEMENT

To be the number one brand in our chosen fields and to be recognized as one of the most prestigious organizations evoking pride of ownership by offering unmatched quality products through Innovation, Speed, Flexibility and Empowered Employees. The vision is the guiding principle: a dream that is realistic, credible and achievable. Successful leadership that results in quality performance, begins with the vision of what a leader and his/her followers intend to accomplish

 

CORPORATE MISSION

To benefit society at large - through innovation, quality, productivity, human development, and growth, and to generate sustained surpluses, always striving for excellence, within the framework of the law and with pride in ethical value.

Past Growth

In times of recession, CTVs were the only products outperforming the market. In last 3 years, the CAGR growth for CTVs has been 26.6% as against 5.34% in washing machine, 10.66% in A/C’s, 6.84% in refrigerators and 8.69% in two wheelers.

Onida’s own sales figures prove it. The company had achieved a sales growth of 70% when market growth was 30%. Though most of this volume growth was capitalized on World Cup.

CTV continues to be a skewed market. Around 20mn sets sold in a market of 200mn households (with purchasing power).

Company Products

Black & White TVs

Rural B/W TVs is a declining market. Though MIRC is a leader with 13% share, the company has been pro-active and has introduced ‘Candy’ into this market. Candy is a 14-inch CTV, priced 40% above a B/W TV. This 14-inch segment is bout 15% of the total market. Company’s foray into Candy will attract a switch among B/W consumers and more importantly have an appeal to trendy youth. 60% of the purchase decisions are made by youth. Within few months of launch the company has sold 650-700sets of Candy. This product has been a success for the company.

CTV’S

In last one year the company has improved its market share in this segment from 9% to 12%. World Class picture quality and sound system has enabled the company to make a breakthrough on export front. Onida is a leading brand among Indians in Gulf. The company also plans to market its 14-inch TVs in UK market. However contribution of exports to turnover would be very negligible in coming years.

Computerization and excellent sound systems-range of 200-300watts has made it possible for the company to charge premium in a co modification market.

MANAGEMENT

G L Mirchandani	CHAIRMAN & MD
Vijay J Mansukhani	Director
G Sundar	COO
A C Augustine	VP, HRM
Vijay Kumar	VP, Finance
Deepal Dalal	VP, R&D
P K Dixit	VP, R&D
Sunil Kishinchandani	VP, Operations

 

RECOMMENDATIONS

Ø    The fifty percentages of People may make a trial to sell at least forty CTVs per month.

Ø    As the fact shows that maximum ordering decisions are influenced by customer demand, company may try to motivate the respondents since they contribute a lot in increasing the sales of the company.

Ø    The company may try to bring out attractive incentive schemes for the People.

Ø    The company may take some measure to increase the preference of Onida brand among the customers.

Ø    The company may organize in-house meetings which gives an opportunity to People to project their grievances