The Hindu Business Line : Philips gung-ho about growth

THE high end of the TV market is witnessing a scorching pace of growth and Philips India Ltd wants to capitalise on the booming demand for these products, according to Mr K. Ramachandran, Managing Director, PIL.

Though the company has got a foothold into the mobile handset market, it does not have any plans to get into handset manufacture in India in view of the fact that its strength was in component production, he said.

Speaking at a news conference in Coimbatore today, he said Philips was in direct competition with Korean manufacturers such as LG and Samsung only in the television segment. While the Korean companies produced refrigerators, washing machines or microwave ovens that PIL did not produce, they also did not have a presence in lighting, semiconductors, software business, DVD, medical equipment etc in which Philips has a significant market share.

He said the high end of the TV market — flat screens, LCDs and plasma screens, popularly called as `flat, slim and white' — is witnessing a rapid growth. By volume, these products account for about 10-12 per cent of the country's total TV market estimated to be at 10 million units annually.

Philips figured among the top three manufacturers in this segment. Philips was not making an aggressive foray into the lower end of the TV market.

He said the high-end TV market was growing at the rate of over 50 per cent and PIL was completely concentrating on this segment. He said, "Our intention is not to go for high volumes." In the last two to three years, PIL has clocked a 30-35 per cent growth in the TV segment.

He said Philips today was not the Philips that people knew 10-20 years ago. The company, which had several legal entities, is now bringing them together so as to become a single entity and the last three different units will be merged into one in the near future.

He said the company's Bangalore-based software operation is growing very rapidly. This unit, which has about 1500 employees, is growing at the rate of 20-25 per cent in terms of people and 30-35 per cent in terms of business. The software unit is doing embedded software research exclusively for Philips and nearly 20 per cent of Philips' software development globally — in medical equipment, in semiconductors, in consumer electronics — is done at the Bangalore centre.

Mr Ramachandran said Philips started in Chennai last year a financial accounting service centre for doing accounting for its North American operations. He expected the number of employees at this centre to reach 300 by the end of the year and 400-500 by 2007-08. The company, with a turnover of about Rs 3,000 crore, was growing at over 17-18 per cent, with lighting and consumer electronics business accounting for about 75 per cent of the business, medical, semiconductor and software operations contributing around 20 per cent and domestic appliances 5 per cent.

In the next five to ten years, Philips would increasingly become a health care, lifestyle company built on technology; and as far as India was concerned, the issue would be how to offer the latest technology at an affordable price.

Mr Ramachandran said Philips was already present in the cellular handsets segment but not a major player in that. But 50 per cent of what went into the handsets worldwide such as screens, speakers, intelligence inside, power management systems was produced by Philips and it was concentrating on production of handset components rather than whole handsets themselves.

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