It is one company that was not expected
to survive the multinational onslaught. A sugarcane and cotton grower,
Madhavlal Dhoot set up
maker Videocon International Ltd. in 1985, and by the late 1980s, the
group had emerged as one of the top manufacturers of television sets
Competitive pricing has always been at the heart of Videocon’s
successful sales strategy, but few thought that Videocon would be able
to put up a
fight against global players, which boasted deeper pockets, extensive
product portfolios, and big expenditures on research and development.
Videocon has not just survived, but emerged as one of the leading brands
in the Indian market.
Honing In On the Global Market
The Videocon group is the largest homegrown
consumer electronics and home appliances company in India today with
a turnover of Rs 50 billion
U.S. $1.1 billion), 18 manufacturing facilities, and an employee base
of 10,000 people. Currently, it is the number-four player in the Indian
appliances segment and is competing with Whirlpool, LG, and Samsung for
the leadership position in an intensely competitive market.
The group is not only looking at consolidating its position in the
domestic market, but also aims to grow its exports. It has begun selling
appliances to markets in the Middle East and Europe. Says Pradipkumar
Dhoot, president, and son of the group’s founder, “The future
for Chinese and Indian companies is very bright. Haier, TCL, and Kelon
among the Chinese brands that have established themselves as global players.
We hope to be counted among the top 10 brands in the world in the coming
years, and we are working toward that goal.”
an installed capacity of 600,000 units per year,
Videocon’s Chitegaon refrigerator manufacturing
facility is currently utilizing up to 75 percent
of its installed capacity. Pictured is the refrigerator
maker’s assembly line. APPLIANCE magazine photo.
Brave words? Perhaps, but Videocon’s ambitions are matched by action.
In 1997, Videocon acquired an Italian compressor plant with the aim of
using it as a gateway to Europe. Today, many refrigerator brands sold
in Europe have compressors made by Neechi Compressors, a Videocon subsidiary.
The group has also set up an air-conditioning plant in Oman and plans
set up a refrigerator plant in Indonesia and South Africa in the next
2 years. In addition, it has set up a sourcing company in China to be
to source components and tools from China and other Southeast Asian countries.
Focusing on Manufacturing Capabilities
The Videocon success story has been scripted in its facility in Chitegaon,
which is spread across 120 acres (485,624 sq m) and situated 13 km from
the city of Aurangabad, in western India. The 30,000-sq-m washing machine
plant within the Chitegaon facility was set up in 1990. The appliance
maker has pioneered the washing machine concept in the Indian market;
to be the first company to introduce washing machines. In fact, an often-quoted
anecdote is how farmers’ wives in Punjab would use the washing
machine to churn curd and make lassi, a summertime thirst-quencher.
Videocon is also said to be the first appliance company to introduce
the frost-free refrigerator in India. In 1992, a 32,000-sq-m refrigerator
facility was set up on the Chitegaon premises. While the refrigerator
facility has an installed capacity of 600,000 units per year, the washing
facility can manufacture up to 500,000 units per annum. Both facilities
are currently utilizing up to 75 percent of their installed capacity.
Videocon’s growth has seen several phases. During the first phase
of its appliance-making venture, the company collaborated with Matsushita
of Japan for technical and design capabilities. “Videocon has always
focused on product quality and durability,” notes
S. Sethuraman, director, Videocon Appliances Ltd. “The fact that
we have been able to achieve this is a result of our close collaboration
with Matsushita. Over the years, we have reinforced our design and quality
standards to meet the contemporary needs of consumers.”
And while Videocon no longer needs Matsushita’s help in making appliances,
it still shares a close relationship with the Japanese company. In fact,
when Matsushita set up its own washing machine facility in India—in
Ranjangaon, near Pune—Videocon helped to set up the plant. In addition,
Videocon Group currently has a 30-percent equity stake in the Matsushita
factory that manufactures the National Panasonic brand of washing machines.
The Chitegaon facility has invested in backward integration. Says Mohan
Paul, deputy general manager and head of the refrigerator division: “We
manufacture everything from the copper wires that go into the refrigerator
to the packing boxes.” Mr. Sethuraman adds: “This gives us
leverage, as we can control the quality of our products.”
Most appliance makers in India outsource the motors that go into the
washing machines. However, Videocon has its own in-house motor assembly
Mr. Sethuraman: “Videocon has established a reputation for the
quality of the motors that it produces. It has become one of the major
of our brand.”
Similarly, the facility has a well-equipped plastic injection molding
shop that caters to the plastic requirements of Videocon’s washing machine
and refrigerator divisions, as well as those of its electronics division.
The mold shop, which boasts of a wide range of equipment, including high-capacity
machines of 1,300 and 1,600 tons, have been imported from the best global
manufacturers such as Toshiba, Chensong, and Windsor. Says Dongil Kim,
chief technical officer, Plastics, “Aesthetics drive sales of consumer
appliances today. By having an in-house plastics shop, we can not only
control the quality of the plastics that are being used, but also make
huge cost savings in terms of logistics management.”
A well-equipped tool room is another important feature of the Chitegaon
facility, as it caters to the company’s requirement of upgrading
model designs and developing components for the new models.
The high level of backward integration in the facility also makes it
imperative for the company to have processes in place to ensure a smooth
flow of material
and a glitch-free production environment. Videocon has adopted the Japanese
5-S system to ensure process and product quality. The five principles
include seiri (sorting), which ensures that the work area is free of
items; seiton (systematic arrangement), which calls for arranging and
organizing items in prefixed locations; seiso (spic and span), which
the work area is organized and all pieces of equipment are kept clean;
seiketsu (serene atmosphere), which emphasizes the need for a serene
working environment; and shitsuke (self discipline), which focuses on
for self-discipline in every worker. “These practices are monitored
on a daily basis, and workers are given feedback on their performance,” says
Mr. Sethuraman. Daily feedback on the quality of products being produced
at the facility is also provided to the workers, he adds.
most Indian appliance makers outsource washing machine
motors, Videocon has its own in-house motor assembly
unit. APPLIANCE magazine photo.
“The idea is to get it First Time Right,” notes Mr. Sethuraman. “The
daily monitoring and evaluation make the whole system transparent and
systems helped Videocon achieve the ISO 9002 quality certification in
1994 and the latest version of ISO 9000 in 2003 for its refrigerator
in 2002 for its washing machine plant.
As a result of its processes, Videocon says it has been able to offer
consumers products that meet their expectations of quality, reliability,
Recently, a voluntary consumer group, VOICE, tested and rated the top
refrigerator brands in the country. In November 2002, VOICE ranked Videocon’s
refrigerator as the brand with the highest cooling efficiency (i.e. the “pull
down time” is just 78 min compared to Kelvinator’s time of
202 min, according to VOICE). The voluntary consumer group says Videocon
also has the lowest energy-consuming refrigerator among eight top brands.
As a result, the electricity costs to the consumer is just Rs 876 per (approx.
$19) annum. On the two functional aspects—cooling efficiency and
energy efficiency—Videocon scored over other brands, thus vindicating
the company’s investment in manufacturing its own compressors.
The emphasis on product quality has also enabled Videocon to establish
itself as an OEM supplier to many of the multinationals that have entered
the Indian market. Samsung, Whirlpool, and Akai are among the prominent
brands that have sourced their refrigerators from Videocon’s facilities.
In the washing machines category, Videocon has been a major OEM supplier
to Godrej and Whirlpool. Says Mr. Sethuraman: “Our experience as
an OEM supplier has enabled us to further enhance our manufacturing capabilities.”
Videocon set up a new factory in Bangalore, Applicomp India Ltd., in
2000 to manufacture compressors, which it sells to other leading appliance
such as Whirlpool and Daewoo, apart from producing high-end refrigerators
and India’s only top-loading, fully automatic washing machine.
The company is also undertaking expansion of its facilities in other
including the one in Noida in Uttar Pradesh and in Kolkata in the state
of West Bengal. These plants are being developed to cater to the regional
markets in North India and East India, respectively.
Consolidating for Market Leadership
Throughout the last couple of years, Videocon has been focusing its attention
on regaining its market leadership position in the refrigerators market,
as well as consolidating its hold in the washing machine category. Says
Sunil Tandon, vice president of Marketing, Videocon International Ltd., “We
have been working our model mix, revamping our distribution network, and
updating our service setup.” The company’s promotion campaign
has also gotten a new look, as it has named India’s top-rated film
star, Shah Rukh Khan, as the group’s brand ambassador.
In terms of Videocon’s marketing strategy, the company has decided
to strengthen its value-for-money positioning by offering additional features
at every price point. For instance, traditionally only the premium-end
refrigerators have offered models with water dispensers. “We want
to take the customer up the technology curve, and, therefore, we have introduced
direct-cool refrigerators with water dispensers, which have been branded
Watermatic,” says Mr. Tandon. “We are giving consumers something
that no other brand is offering at that price point.”
is said to make India’s only top-loading, fully
automatic washing machine. The appliances are made
in its 30,000-sq-m washing machine plant located
in Chitegaon, India. APPLIANCE magazine photo
The success of its strategy is evident based on the fact that nearly
25 percent of its volume growth last year came from the sale of the Watermatic
models. What’s more is that Tandon expects to sell 625,000 refrigerator
units this year as compared to 415,000 last year, and of these, nearly
40 percent of sales is expected to come from the Watermatic models. Says
Mr. Tandon: “While the industry is witnessing a decline in the average
price realization per product, our average price realization increased
by 11 percent in 2003.” As a result, Videocon emerged as the fastest
growing refrigerator brand in 2003, as total sales for the brand grew by
58 percent. “This year we will move up from the number-four position
to the number-three position in the refrigerator market,” states
In the washing machines category, Videocon says it has always dominated
the semi-automatic segment. With players like LG grabbing a chunk of
the fully automatic segment, Videocon has now been successful in creating
segment between the semi-automatic and fully automatic segment. The price
differential between the two segments can be as much as Rs 10,000 (approx.
$221). Therefore, Videocon launched its Neo washing machine in the Rs
8,000-9,500 (approx. $177-$210) price range, which needs just one mid-cycle
by the user. In addition, the company has launched more semi-automatic
models in the 6-kilo capacity range. These new products have enabled
the company to grow sales by 23 percent in 2003, a year when the market
by only 3 percent.
The company has also decided to focus on enhancing the aesthetics of
its products and is putting a lot of emphasis on design and development.
company has set up research and development laboratories in Tokyo, Seoul,
and Shanghai, which work with local companies in these countries to develop
designs and source components and tools. “The advantage is that these
R&D labs enable Videocon to keep pace with the latest global developments
and trends. Besides, we can source relevant components and tools without
losing precious time,” says Mr. Sethuraman.
Videocon’s strength has always been that it has met the Indian consumer’s
demand for reliable and durable products that are not just functional,
but also affordable. Not surprisingly, its product portfolio includes
a wide range of product sizes. It is said to be the first company to
a no-frills, low-cost refrigerator for just Rs 7,000 (approx. $155),
targeted at the rural consumer. On the customer service front, the company
the concept of a mobile service center called Videocon on Wheels. The
mobile workshops offer door-to-door service to Videocon customers in
where the company does not have an authorized service center. Its service
network includes 85 mobile vans, 410 authorized service centers, and
call centers at 30 strategic locations across the country. It also consists
of a team of 1,000 service engineers and more than 100 spare-parts dealers.
As for distribution, Videocon has always enjoyed a good rapport with
its dealers. A large part of the credit goes to Pradipkumar Dhoot’s one-on-one
relationship with his dealers. Says Mr. Tandon: “He is constantly
being asked to open outlets by dealers. There was one dealer who even sent
the photographs of his son’s bride-to-be for approval from Mr. Dhoot.
It’s almost as if dealers consider him to be [a member] of their
Perhaps, these values—which are intrinsically Indian—have
helped Videocon to hold its own, despite the invasion of multinational
into the Indian market. Today, Videocon ranks among the top 50 most-trusted
brands in India, according to a brand equity survey done in 2003 by AC
Nielsen ORG-MARG for the Economic Times.
Having fine-tuned its product quality, service, and marketing, Videocon
now hopes to recapture its leadership position in the domestic market
and enter new global markets. Videocon’s long-term goal can easily be
found in its company anthem, which is used to motivate employees—”Saare
Jahan Se Achcha Videocon Hamara.” This translates to: “Videocon
is the best in the whole world.”