Videocon

Case Study Analysis

Case Study Analysis
 By Group 4:
 By
Shubham
Group 4: Sharma 019
 Shivani Anand 020
 Shubham Sharma 019
 Apoorv Sharma 021
 Shivani Anand 020
 Shriya Jain 022
 Apoorv Sharma 021
 Sahil Aggarwal 024
 Shriya Jain 022
 Pravesh Anjana 058
 Sahil Aggarwal 024
 Pravesh Anjana 058
 Flow of Presentation

Company Overview Financial Analysis

01 About Videocon
Timeline of Videocon 04
Simple Table
of Contents for
Business Segment Strategies
02 Market
PowerPoint Videocon Segment offered in
05 Business Strategy

Fall of The Brand Models

03 06 PESTEL
SWOT Analysis
Value Chain
Porter Five Forces
Videocon Overview
About Videocon

Type Public Mission Statement

Industry Conglomerates
To delight and deliver beyond expectations
Founder Venugopal Dhoot through ingenious strategy, intrepid
entrepreneurship, improved technology,
Headquarters Mumbai
innovative products, insightful marketing and
Product Consumer Electronics, inspired thinking about the future
Telecommunication, DTH,
Petroleum, Retail
Founded 1986
Number of international China, Poland, Italy, Mexico
Location
Number Manufacturing Sites in 17
India
TimeLine

1986 Videocon establish it Venture

2005 Videocon acquires entire stake of Electrolux India

2006 Videocon Industries enters into MoU with GAIL

2007 Videocon Industries has bought Planet M, the music and entertainment retail arm of media house Bennett, Coleman & Co.

2008 Videocon set to roll out telecom service in India

2011 Videocon announces New Natural Gas Discovery Offshore Mozambique

2015 Videocon announces Sale of Spectrum for 2 Circles to Idea

Business Segment

Videocon

Consumer
Mobile Phone DTH Telecommunication Retail Petroleum
Electronics
Videocon Telecommunication LTD
• An Indian cellular service provider that offered GSM mobile services in India under the brand name
Videocon.
• Videocon launched its services on 7 April 2010 in Mumbai
• Videocon held licenses to provide mobile services in 18 out of 22 telecom circles of India
• In 2008 During the 2G Spectrum Case the Supreme Court cancelled 122 licenses issued, including 21
licenses belonging to Videocon.
• In the 2012 spectrum auction, Videocon won back licenses in 6 circles.
• In 2016 Videocon sold its spectrum in all six circles it operated in to Bharti Airtel for ₹4,428 crore

Videocon Petroleum
• In 1990 Videocon diversified into oil and gas
• In 2000 they acquired stake in hydrocarbon blocks in Brazil, Australia and Indonesia
• In 2013, they made loan repayments by selling gas assets in Mozambique for $2.5 billion
Videocon Electronics

• Videocon sells consumer products like colour televisions, washing

machines, air conditioners, refrigerators, microwave ovens and many
other home appliances
• Videocon TV ranks 7 in India as the most Trusted Brand.
• Videocon Refrigerators are ranked 56 as the Trusted Brand.
Televisions

Videocon D2H

• In 2009, Videocon launched its DTH product and introduced first radio
frequency remote in India, Videocon offered LCD & TVs with built-in
DTH satellite receiver with sizes 19" to 42“
• Videocon D2H is 3rd ranked DTH services Provider.

DTH
Source – Brand Trust Report 2019
Videocon Retail

• Videocon owns three retail brands : Planet M, DigiWorld and Next.

Videocon Mobile

• In November 2009, Videocon launched its new line of mobile phones. Videocon has, since
launched a number of handsets ranging from basic color FM phones to high-end Android devices.
How Videocon fell from grace and into
insolvency
 Despite the diversification, consumer durables was still the largest
contributor to Videocon's top line.
 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.
 Despite the diversification, consumer durables was still the largest
contributor to Videocon's top line, but started stagnating with increase in
competition.

Source – CNBC TV 18
How Videocon fell from grace and into
insolvency
 The cancellation of license in 2012 in the 2G telecom scam not only
dented the brand but also weighed down its balance sheet.
 They couldn't hold on to their positioning, or leap forward fast
enough to changing technology like LCD and flat panel and customers
saw that
 Videocon also extended unlimited credit lines to dealers, which
would eventually hurt the company because the tap was only
switched off when an account went bad.
 With revenue stagnating and interest cost rising, the company
started making losses and was unable to service its debt.
 In November 2016, Videocon Industries Ltd merged its DTH service
business with Dish TV.
 The company also sold a 10% stake in a gas field off Mozambique to
state-owned Oil and Natural Gas Corp.
 Revenues from the oil and gas business also dropped due to fall in
global crude oil prices during 2015 to 2016.

Source – CNBC TV 18
How Videocon fell from grace and into
insolvency
 It also went on to sell its entire telecom business to Bharti
Airtel.
 But these actions did not pay off. The unpaid interest
continued to accumulate and bloat the debt pile further.
 With mounting debt, market capitalization also took a plunge.
Currently, Videocon Industries has more debt than value.
 Just days after Videocon Industries' promoter Venugopal Dhoot
sought a stay at the National Company Law Tribunal to halt
bids for group companies, Chinese electronics major TCL made
overtures to buy the brand even as it chalked out plans to set
up a greenfield operation in Bengaluru for manufacturing all
the products Videocon

Source – CNBC TV 18
Financial Analysis

• Debt 2017 – 23000, 2018 – 24500, Loss in 2018 – 5200, 2017- 2000.
• The whopping increase is due to two main reasons: falling revenues and high debt.
• Videocon expanded into oil and gas, telecommunications, and direct-to-home (DTH) TV. However, its main
business of electronic appliances is struggling to make the money required to service the debt.
• Its interest coverage ratio, the ratio of operating profit to the interest payable, is below one, according to Credit
Suisse. Source – [Link]
Financial Analysis

• The M-Cap as on 24th July was just 0.5 billion.

• Its cash cow consumer electronic segment revenue kept on falling which was not able to finance the debt burden.
• Videocon Industries was admitted by the National Company Law Tribunal (NCLT) for insolvency proceedings in January
2019.
Source – Quartz India
Strategies
Business Strategy

Multi Level Strategy Backward Integration

• First company to adopt multi • High degree of backward

brand strategy integration led them to gain
• From Toshiba, premium brand to advantage over competition
Akai and Sansui, low priced brand • Manufacturing of components
• It was once ahead of Samsung in like electron guns, metal parts,
market share by approximately 6 deflection yokes for CTVs, plastic
% components, glass panels and
funnels for color picture tubes
Models
PESTEL

Economic Factors
Political Factors

P E
Growth of retail sector
Anti dumping duty on Players in organized retail market
imported color picture like Croma, Reliance Digital
tubes
PEST Diagram Social Factors
Technological Factors
for PowerPoint
Demand for consumer durable is
growing but seasonal
Rise in disposable income
S T Higher quality products
Improved
consumption
electricity

carbon
Environmental Factors
Resolutions to reduce emission of
footprints in the
E L Legal Factors
Labor union laws affect
manufacturing and
atmosphere production processes
Models
SWOT Analysis - Strengths

• Historically Present Brand: Rich history of presence in the electronics segment-first to secure a license to
make color televisions.
• Presence in diversified sectors: The company has the presence in several sectors such as home appliances,
consumer electronics, digital television, oil & gas, retail, telecommunication and power.
• Wide brand portfolio: under KenStar, Electrolux, Kelvinator, Sansui, Videocon brands.
• Wide distribution network: owning retail stores namely Digiworld (selling its own products) and NeXT
stores.
Models
SWOT Analysis - Weakness

• Scaling up of operations: unable to scale up operations in various domains as there is high

competition in each of them, thus reducing profits.
• Over-dependence on oil & gas: a debt-ridden company highly dependent on their oil & gas business
to clear off their debts.
• Investment in unknown business areas: diversified into areas like DTH and insurance and mobile
phones which are not part of their core areas of expertise.
• Tarnished brand image: after it went for Corporate Insolvency Resolution.
Models
SWOT Analysis – Opportunity

• New segments: There is a lot of focus on new technology areas like artificial intelligence and
machine learning which are going to lead to new segments like interconnected devices and smart
technologies.
• Expansion to foreign markets: With IoT, the demand for home appliances will increase
and people will want to invest in smart devices. This can create a surge in demand for home
appliances that are based on smart technologies in a global level.
Models
SWOT Analysis - Threats

• Increased competition from foreign players: As the company is in diverse sectors, most of them being
highly completive, they face heavy competition locally and globally.
• Government regulations in the DTH sector: TRAI’s new guidelines brought in a new framework of a
basic pack plus A La Carte to offer fair prices to consumers.
Models
Value Chain
Firm Infrastructure (Financing, Planning, Investor relation, Legal Matters)
Support Activities

Human Resource Management (Recruiting, Training, Rewarding)

Technology Development (Integration in Production, Distribution, Marketing and HR activities)

Procurement (Equipment, Machinery, Raw Material)

Margin
Inbound Logistics Operations Outbound Logistics Marketing & Sales After sales
service
Primary Activities

Machining, Packing, Sales force

Assembling and Material Handling, Promotion
Retrieving Raw Testing. Warehousing, Advertising Installation
Material, Storing Improving Scheduling, Order Marketing Customer
Inputs and Internally Productivity, Processing, Channel Selection Support
Distributing Raw Maximizing Efficiency Transporting and Training
Material and and Competitive Delivering to the
Components Success Destination.
Models
Porter Five Forces
MODERATE

NEW ENTRY
LOW

THREAT OF
Capital intensive industry.
Large number of sellers
available. Evolving tech. and loyalty block.

Availability of cheap
imports from china and
vietnam.
SUPPLIER POWER COMPETITIVE BUYER POWER
RIVALRY HIGH
Availability of options and
information to the user.

SUBSTITUTION
LOW

THREAT OF
No substitute for electronics.

Competitive rivalry is quite high in this sector, as players use innovation and product
differentiation to beat peers.
Thank You