Panasonic will see B2B grow to 50% of India biz

It’s 100 years since Kōnosuke Matsushita founded Japan’s largest consumer electronics company, the $72 bn Panasonic Corp. And, it’s 10 years since Panasonic re-entered India on its own, rather than in tie-ups with other entities. While 70 per cent of Panasonic’s business globally comes from B2B, in India, it’s exactly the other way round, with 77 per cent revenues from B2C businesses.

Manish Sharma, the 46-year-old President & CEO of Panasonic India and South Asia, and one of three non-Japanese to be anointed an executive officer in Panasonic Corp, intends to do something about this mix. With a whole portfolio of B2B businesses rolling out in India, its B2B solutions business could well garner 50 per cent of Panasonic’s revenues in India in the next five years. “This reflects the diverse product portfolio and capabilities that exists and the potential that Panasonic can see in creating a future here in India,” says Sharma.

The other lesser-known products

While Panasonic is known for its TVs, refrigerators, washing machines et al , Sharma says there is a whole array of B2B products that the company has that consumers are not aware of. It leads in the large screen movie projectors market, markets digital display signages in malls and hotels, HD video conferencing systems, telephones, PBXs, niche products such as toughpads (notebooks for industrial use), industrial robots called SMTs which are surface mount technology machines which TV and mobile phone makers use to insert components into PCBs. It supplies industrial robots and fuel sensors to the automotive industry as well. “Then we do a lot of security and surveillance systems. From cameras, we’re also looking at moving to provide total solutions for surveillance, which is building all the blocks of what one would need to remain safe using cloud-based analytics,” explains Sharma in a recent interview.

Panasonic expects to do a lot of work around smart city projects. Recently, in Bhopal scores of its cameras were used by a system integrator for street security systems. In UP, its toughpads have been installed in police vans. This notifies the police of a crime committed in their vicinity, and through the help of the connected device the nearest emergency car is sent to the crime scene to investigate. In Gujarat, Panasonic secured an order for hundreds of cameras which were installed across a 1,000 police stations.

While Sharma is gung-ho about Panasonic’s B2B business, for the next few years in India, it’s B2C which will dominate. Expecting 20 per cent growth on its 2017-18 turnover of ₹10,200 crore, Sharma says there are a lot of factors which are favourable this FY. “There’s a backlog due to all that has happened in the last 12-18 months. GST issues are settling down, the cash flow is improving in the market and we expect the monsoon to be better and, hence, rural demand as well,” he explains.

Steady growth

Except for the last year, when growth dipped to 7-8 per cent, consumer appliances have seen close to 10 per cent growth annually. “I believe the industry growth this year would be 10-11 per cent though at Panasonic we are targeting a higher growth,” says Sharma. He attributes this to the fact that refrigerator manufacturing, which used to be the biggest hole in its portfolio, is now on stream. This unit, with a capacity of 5 lakh frost-free fridges a year, has come up at Jhajjar in Haryana, where its AC and washing machine factory is.

Fridges are a huge opportunity in the country, he says. The demand is for 12 million units a year, 30 per cent of which is for frost-free, while for TVs it’s 15-16 million a year. “While the world has moved to frost-free fridges, many in India still prefer direct cool as direct cool fridges can retain their coolness for a longer time in case of power outages,” explains Sharma.

So far Panasonic has been importing and marketing its fridges in the country and now with local manufacture, “it would definitely help us to not lose money to the extent that we used to when we were importing it. We were not only paying duties, but a high amount of logistics cost also as a fridge is a big product and we were sort of subsidising it to be competitive in the market. The bigger advantage is the go-to-market time; the lead time will reduce significantly,” he elaborates.

Autonomy, innovation

Though being part of an MNC headquartered in Japan, Panasonic India, Sharma says, will operate autonomously. It will mean faster decision making on products for India. While it will depend on Japan a great deal for the R&D, in India too Panasonic has invested in an India Innovation Centre in Bengaluru in a tie up with TCS to drive innovation for products for the India, South Asia, Middle East and Africa regions. This centre will work on the diverse B2B products that Panasonic has and strive to build holistic solutions around it for customers.

The centre’s thrust will be on ‘platform creation’. “It will bring existing products of Panasonic together and deliver them as solutions to the customers. For example, if you’re looking at smart cities as a large opportunity, not many companies will be able to bring in a lot of products together and address smart city as a whole. Today we have energy-related solutions; surveillance solutions; we have signage solutions. We are taking an approach to bring these products together so that consumers can benefit from using one platform for a variety of products and solutions,” he elaborates. That apart, Panasonic has also tied up with Tata Elxsi to innovate on consumer appliances for the region.

More autonomy could perhaps mean fewer visits for Sharma to Japan – before he became an EO, he had made over 50 visits to Japan; last year alone it was 12 visits for parleys and reviews. Ask him if he’s learnt Japanese and likes the food, he laughs, saying that he’s instead trying to teach them English. “That’s easier,” he says. And, yes, he’s taken a shine to Japanese food, especially sushi and okonomiyaki, a Japanese pancake.

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