Financial Daily from THE HINDU group of publications
Monday, Jun 07, 2004
Samsung India eyes over 30 pc rise in turnover
New Delhi , June 6
MAINTAINING that the focus will be on the niche product market, Samsung India Electronics Ltd (SIEL) believes that it's the `quality and not price' that will help in the long run. The company has chalked out aggressive strategies to capture the South-West Asian market with India as its hub.
Upbeat about the growth prospects of the company and proposing to close 2004 with over a 30 per cent increase in turnover, Mr Kwang Soo Kim, President & CEO, South-West Asia, Regional Headquarters, Samsung Electronics, and Managing Director, SIEL, shares Samsung's outlook with Business Line. Excerpts from the interview.
How has the merger of Samsung Electronics India Information and Telecommunications Ltd and Samsung Electronics Ltd helped in the growth of business?
This has certainly helped us in terms of exploring the synergies that exist within the different business groups, besides decreasing the overhead costs. It has also helped in better brand communication by giving us a common platform for speaking to the consumers. Now, we have an integrated marketing team, which works towards defining the positioning for the brand and for all marketing activities, so that the brand speaks to the consumer in one language.
Convergence of business seems to be the order of the day. What are your views on this?
`Samsung DigitAll' represents our global brand positioning at Samsung. We aim to bring communication, entertainment and information together, in easy-to-use digital devices for our customers. And this positioning has indeed worked - according to Interbrand Brand Equity Survey, Samsung's brand equity leaped to $10.85 billion in 2003 from $8.31 billion in 2002, an increase of 30 per cent.
Further, this positioning is working for us in India too, even as we strive to introduce and develop the market for our digital products in the country. The Digitallhomes have all Samsung lifestyle products housed together, giving consumers an understanding of our complete range.
Is the company planning to expand its installed capacity in India? The company has been outsourcing products, particularly refrigerators from regional players. Now with your own manufacturing facility, commissioned in September 2003, do you propose to continue the same?
Currently, our capacity is enough to meet our existing requirements for all product categories in consumer electronics and home appliances, including CTVs and refrigerators. We will be doing only need-based expansions. Starting this month, we have decided not to outsource products as far as possible.
Regarding additional investments, we will be making further investments to improve our existing facilities. At present, we are not looking at setting up another facility, but we do not rule out the same in future, depending on the demands.
What is the total turnover the company is expecting during the current year?
We are targeting an increase of over 30 per cent in turnover this year. Samsung India closed 2003 with a turnover of about Rs 4,000 crore.
Recently, the company made India the base for its business in South-West Asia, excluding Pakistan. How beneficial has it proved for the company?
Being the hub for business in South-West Asia is an exciting opportunity for us to not only develop business in those countries but also to grow the business in India by increasing exports to those countries.
The success of our products in India, coupled with the fact that we will be providing these markets customised products, should help business. We are already exporting colour monitors and CTVs. We recently carried out a series of Digitall Celebrations 2004 roadshows in Sri Lanka, Bangladesh and Nepal, and we got a positive response.
In the export market, is Samsung India competing with other Samsung outfits? What is the expected export turnover for 2004?
There is no competition among the various Samsung regional headquarters. Including India, there are seven regional hubs. Exports this year should be around Rs 80 crore - Rs 90 crore. We are looking at exporting to the CIS and SAARC countries. The company clocked exports worth Rs 40 crore last year.
When Samsung came to India, the company was going neck to neck with LG Electronics. However, somewhere LG is said to have left Samsung behind. According to industry analysts, this is because Samsung started focusing more on niche products and not the mass market? What are your views on this?
I think we are doing well. We are either the leader, or in the top two for most of the product categories that Samsung is selling in the country. Technology is our strength and our customers appreciate the value we bring to them in the form of our simple, easy-to-use, WOW Products (technology products from the Samsung stable). Products that combine innovation, style and technology .We are and will continue to provide our consumers with the latest technology products, backed with strong after-sales service. However, it is true that Samsung is focusing on premium products market.
How many research and development facilities does the company have in India? What is the total investment on R&D? Which are the products developed here that are used in Samsung global scene as well?
We have a software and hardware development centre at Noida catering to the consumer electronics sector. We have around 150 employees at the R&D centre at Noida. Through these R&D centres, we have introduced TVs with 1,000 W PMPO sound output or refrigerators customised to Indian requirements. The most recent example is our DNIe range available in 21-inch and 29-inch screen sizes.
The Samsung India software operations unit in Bangalore employs 600 professionals and focuses on the telecom segment. The company will be increasing the manpower at these facilities. The total R&D investment so far in Noida is $12 million and in Bangalore, it is about $30 million. Every year, we are increasing our R&D spend by 30 per cent.
Which are the categories Samsung proposes to focus in the coming years? What are the launches planned and what are your plans for the audio segment?
Continuous range enhancements in existing categories are in the offing. The company has also planned new models of MP3 Players shortly. The company would be focusing on DVD Home Theatre Segment and will be introducing four new models in next two months. Further, the company would be introducing DVD Playback option in the soon-to-be-launched mini and micro models.
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