New Delhi: Consumer electronics firm Videocon Industries Ltd will diversify into selling power inverters and mobile phones, boost research and development (R&D), and streamline operations, seeking a larger global footprint in the next three years, a top official said.
Upbeat: K.R. Kim of Videocon.
“In India, electricity is a big problem. So, we want to get into the power inverter market by early next year,” vice-chairman and chief executive officer K.R. Kim said in an interview. Power inverters are devices that store electricity locally in batteries, which can then be used during power outages.
“Another category we are looking at is mobile phones,” Kim said, adding that the company would outsource the production of inverters and cellphones. “In the case of mobile phones, we could (even) import from China or high-end phones from Korea.”
Kim took charge of Videocon’s consumer electronics business in May this year, after leading LG Electronics India Pvt. Ltd for about a decade. The $4 billion (Rs19,480 crore) Videocon group also has interests in oil and gas, retail and colour picture tubes.
“My dream is to lay a basic foundation for Videocon to become a global brand in the next three years,” Kim said. For an increased international presence, the firm will have to focus on R&D, cost-cutting and consolidation, streamlining operations and optimum utilization of production capacities, he pointed out. “Our R&D is not strong enough to support global markets. We need to have people at least five times more than what we have right now,” Kim said. The company intends to add some 200 people in three years to the 50 working at its R&D unit at Aurangabad, Maharashtra.
In 2009, it will invest Rs150 crore on R&D, marketing, product launches and manufacturing. Videocon, which currently exports 10% of its production to West Asia and Africa, would also look at new markets such as Latin America. “In the next three years, 20% of the products will be exported.”
Kim also plans to focus on consolidation and streamlining, and has already reduced the number of branch offices from 200 to 48 in five months. “We are trying to expedite decision-making by cutting down the number of steps involved,” he said.
Videocon has factories in Aurangabad, Bharuch (Gujarat), Kashipur (Uttarakhand), Kolkata (West Bengal), Shahjahanpur (Uttar Pradesh) and Bangalore (Karnataka). It currently outsources 20% of its production to third-party manufacturers.
The company is looking at better utilizing the capacities at its units and increase outsourcing. “By next year, we may outsource 30% of total production,” Kim said.
The company is aiming at an annual growth of 20%. “Twenty percent value growth is not small, even when the market sentiments are low,” the chief executive said. “Our current market share across product categories and brands is 25%, and within the next three years, we may have 30% market share.”
The company is also cutting costs. “We will be doing 10% cost-cutting through innovation in R&D, and 5% cost cutting through loss elimination,” Kim said.