Videocon to shutter select units, wind up non-performing brands
While Rivals Have Fewer Manufacturing Locations, Videocon Has Over A Dozen
CONSUMER durables major Videocon has begun scaling down manufacturing locations across the country, trimming workforce and pruning its brand portfolio, it is learnt. Laggard brands like Hyundai and Akai will face the axe and manufacturing sites will be brought down from more than 13 to four in the near future. Some 400-450 employees from the durables business have been moved out with quite a few of them being redeployed in Videocon's new business ventures, DTH and hospitality.
The move is part of the sweeping changes being undertaken by the new business head, KR Kim, vice-chairman and CEO of Videocon Industries, who has begun consolidating operations in the domestic and global markets. This is expected to help evolve a leaner operational structure, cut costs significantly to help improve
business profitability, sources said. Also, sizeable investments are being reallocated to global technology and R&D to improve competitiveness in the marketplace, sources said.
"There is a lot of system clean-up that is happening now. The focus now is on upgrading product quality and improving productivity. We need to have a leaner system to be able to react swiftly to global market changes," said Mr Kim. Sources said Mr Kim is more in favour of having fewer stronger brands in the marketplace. While the weaker brands will be phased out gradually, a new high-end brand is also being launched some time soon. Videocon, which was the mother brand in the group, has slipped in the marketplace and
may not be able to compete effectively in the high-end space, it is felt. It may, therefore, continue to be marketed as a mid-market brand.
Videocon had brought the manufacturing and marketing rights of Hyundai Electronics in 2005 for the high-end durables range. Hyundai could hardly compete with other Korean brands like LG and Samsung, which enjoy tremendous brand equity in the Indian market. Akai India, acquired from the erstwhile Baron International in 1999, too sold few numbers in select dealer outlets in smaller towns. Videocon currently houses brands like Toshiba, Sansui, Akai and Hyundai, apart from the flagship brand, Videocon.
The company is likely to retain the larger manufacturing facilities located in Aurangabad, Bangalore, Hyderabad and Kolkata, sources said. Videocon has one of the largest manufacturing bases, with over 12 facilities across the country. Comparatively, LG has two while Samsung has one. A single massive R&D centre is being planned which will help Videocon scale up product innovation and technology. The strategy is to ensure that 50% of Videocon's consumer durables turnover should come in from global markets.
The company lost marketshares heavily when the Korean majors moved swiftly into the Indian market in the late 1990s, cutting prices and beefing up their distribution across the length and breadth of India.
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