The Hindu Business Line : `Derived synergies present big opportunity for Videocon'

VIDEOCON is one of India's few companies to command the entire supply chain, from manufacturing glass from sand, production of guns and yokes, and converting them into colour picture tubes for sale in the market.

The acquisition of Thomson SA of France has opened up even wider the window to the global markets. In pursuit of its diversification agenda, Mr V.N. Dhoot, Chairman of the Videocon group, told Business Line that the company plans to focus on the international oil sector and enter into strategic tie-ups to boost productivity and profitability.

The acquisition of Thomson SA has increased your colour picture tube and colour picture glass shell capacities and added production units in countries such as Poland, Mexico, and China, as well as market presence in Italy, Sudan, Jordan, China, Oman, and South Africa. What sort of a global market penetration do you perceive from the diversified production base, market, and capacity?

We have now become one of the largest CPT glass and tube manufacturers in the world and a backbone for numerous TV manufacturers in the world such as Sharp, TTE, Vestel, Konka, etc.

The manufacturing bases acquired provide a great opportunity for other consumer electronic goods manufacturing at these locations, for example TV sets, air-conditioners, and other home appliances.

I now have ready access to the world's largest market, China, through two very big plants there.

I have access to NAFTA and South America through my Mexico plant and in Europe I plan to make my plant in Italy the display technology hub of the future.

The biggest opportunity would be the derived synergies from our world-class glass shell base in Gujarat and these colour picture tube manufacturing units, giving us greater flexibility and control over costs.

What are your plans for the domestic market? Will these acquisitions leverage you into the top-end market of CTVs in India and help you take on competition from the likes of Sony, Philips, and Panasonic?

In the domestic market, we will continue to be No 1 in colour televisions and other appliances. Sony, Philips, and Panasonic in fact have a very small market share compared to our operations in India.

We already have a large preferred customer base for top-end CTVs including plasmas and flat CTVs.

This festive season we will be even more aggressive and we will aim to increase our market share even more.

What sort of a threat do you perceive from LCD technology, slim tube, plasma, and other flat panel display screens to the conventional CTV market where you are currently strong?

I am, in fact, one of the first manufacturers in the world to pioneer slim tube production. As far as the domestic and the emerging markets of the world are concerned, CRT TVs still command about 98 per cent of the market share.

Seventy per cent of Indians today don't have a CTV. Through increased efficiencies I will make CRT TVs more attractively priced and thus increase the market size.

The bottom end of the pyramid of the Indian CTV market is much broader due to the possibility of higher entry at a lower price.

As far as Plasma TVs go, our engineers have had extensive training at our R&D centre in Japan.

In 2006, from our manufacturing line of Plasma panels in Italy, we will start catering to the European market initially.

I am very proud of the fact that I will be the first Indian today to make my own Plasma panel, which is a technology restricted to a handful of companies in the world.

How far do you think the 2,000-odd patents which are transferred from Thomson and the newly acquired R&D facilities in various centres in Europe and China help you bridge the technology gap and propel you into the LCD and plasma arena?

As far as access to the 2,000-odd patents go, they are concentrated towards CRT technologies including the flat TVs, slim and extra slim TV technologies.

As I mentioned, our engineers have had extensive research and training programs for acquiring Plasma manufacturing technology and the ability to design the panel structure and back electronics to reduce its cost in the future.

Even otherwise, the threat perceived from the cheaper Chinese and Korean products could hinder your global expansion plans in consumer durables...

As far as China's and the Korean's products go, they don't pose a threat to my plan, since my manufacturing scale, quality, technology, and worldwide acceptance of my components business is one of the most recognised and respected .

You seem to have flourished in a fiercely competitive world of consumer electronics, consumer durables, and ISP arena, and your entry into the oil sector seems have been at the most appropriate time. What would Videocon be focusing on, in the coming years?

Videocon should now first focus on strengthening and integrating its global operations in the field of consumer electronics, deriving synergies from recent acquisitions and lower costs by improving logistics and productivity.

Today I will consolidate my position as the only manufacturer to command the entire supply chain manufacturing glass from sand, manufacturing guns and yokes, converting them into CPT tubes, and finally making TVs and selling them in the market.

In the oil sector, we will focus on oil blocks outside India and still have strategic tie-ups to enhance the profitability.

In Ravva, further enhancements to the current structure will yield us a higher daily production.

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