PROJECT REPORT ON: COPORATE LEVEL STRATEGY OF VIDEOCONESUBMITTED BYANSARI SHAHEEN MOHD YUSUFM.COM-IROLL NO 50ACADEMIC YEAR 2013-2014PROJECT GUIDE:PROF. MOIZ TINWALASUBMITTED TO:UNIVERSITY OF MUMBAIBHURANI COLLEGE OF COMMERCE AND ARTSNESBIT ROAD, MAZGAON,MUMBAI- 400010

PROJECT REPORT ONCRPORATE LEVEL STRATEGY OF VIDEOCONESubmitted in the partial fulfillment for the award of degree of master of commerce studiesTOUNIVERSITY OF MUMBAISUPERVISED BY PRESENTED BYProf. Moiz Tinwala Ansari Shaheen M.COM-1(A) Burhani college of commerce Burhani college of commerce& Arts,Mazgaon,Mumbai-10 & Arts,Mazgaon,Mumbai-10

ACKNOWLEDGEMENTI,Ansari shaheen mohd yusuf student ofBurhani College of Arts, and Commercestudying in Master of Commerce (Part 1) in Management Group for Semester-I, hereby declare that I have completed the project onCORPORATE LEVEL STRATEGY OF VIDEOCONE, for the Academic Year 2013 2014,under the guidance of Prof.MOIZ TINWALA, as a partial fulfilment of the course curriculum in Master of Commerce.The information submitted is true and original to the best of my knowledge.SIGNATURE OF THE STUDENT(Ansari shaheen)

CERTIFICATEThis is to certify that theMr/Mrs/MissANSARI SHAHEEN MOHD YUSUF OF SESSION M.com-1 Roll no 50Div Ais a student of this department. He /She has completed His/ Her project work on the Topic CORPORATE LEVEL STARTEGY OF VIDEOCONE in Burhani college of commerce and artsin 1stsemester of the sector. His/Her has successfully submitted the project report.External Examiner Internal examiner (Signature) (Signature)

INDEXCONTENT

Title CertificateAcknowledgement

INTRODUCTION:Videocon was founded by Nandlal Madhavlal Dhoot in 1987. Headquarter in Aurangabad, Maharashtra .It has an employee base of around 11,054. Largest manufacturers of Colour Picture Tubes and Glass shells forming the backbone of many Colour Television manufacturers around the world. The group has 17 manufacturing sites in India and plants in China, Poland, Italy and Mexico.The Videocon Group is a $4 billion, global business conglomerate with a strong presence in Household Consumer Goods, Oil & Gas, Retail, Telecom, DTH and the Power sector.Financial Performance;Financial Year End: SeptemberBombay Ticker: 511389Turnover (US$ Millions): 1,563.4Revenues: $1,563.4 millionNet income: $89.6 million

Company History - Videocon Industries Ltd.

Videocon Leasing & Industrial Finance Limited, was incorporated on 4th September, 1986 as Adhigam Trading Private Limited. In terms of the necessary resolutions passed under Sec. 21 of the Companies Act, 1956, the name of the Company was changed to Videocon Leasing & Industrial Finance Limited on 14th February, 1991. The Company received a fresh certificate of incorporation from the Registrar of Companies, Gujarat at Ahmedabad on 14th February, 1991.

Adhigam Trading Pvt. Ltd. (ATPL) was promoted by Mr Indrakant T. Parikh and Naishad I. Parikh in September, 1986 as a private limited company and was initially engaged in the business of trading in paper tubes. In September, 1988 the Company decided to diversify in the business of lease financing, hire purchase and investment activities.

The Management of the Company underwent a change in the year 1990-91 by way of transfer of equity shares to the Videocon Group. 1,00,000 Equity Shares of Rs. 10/- each of Adhigam Trading Private Limited were purchased by the Videocon Group at a premium of Rs. 3/- per share in April, 1991. The total consideration of Rs. 13 Lakhs was paid by cheques.

THE COMPANY & THE VIDEOCON GROUP

As detailed earlier, during the initial years the Companies in the Videocon Group had placed business with VLIF leading to growth in its lease financing activities. The group companies have increased the fund base of the Company by infusing funds in form of share capital and unsecured loans. As detailed in the Capital Structure, the promoters currently hold 75% of the paid up capital of the Company. The composition of promoters holding is Videocon International Limited 14,90,000 Shares (13.1% of VLIF's Capital), Videocon Appliances Limited 12,500 Shares (0.1% of VLIF's Capital), the Dhoot Family and their friends & associates 70,10,000 Shares (61.8% of VLIF's Capital). As detailed earlier, the post issue holding would be of the order of 25.50% of the post issue capital of Rs. 33.375 Crores (assuming that all the OCDs are converted @ Rs. 150/- per Share and Equity Shares are issued against all the outstanding warrants).

Videocon is an Indian multinational company with interests in Consumer Electronics, Home Appliances , Colour Picture Tube Glass, Mobile Phones, In 1987, it used to manufacture TV and WashingTelecommunication, and D2H. In 1989-90, Videocon started manufacturing Home Entertainment Systems,Machine. Electric Motors & Videocon entered Refrigerators and coolers segment inAC. In 1995, Videocon started manufacturing Glass shells for CRT. In 1996 it ventured into Kitchen appliances . started manufacturing Compressors & In the year 2000,Compressor Motors. In 2005, Videocon took over 3Videocon took over Philips Colour TV Plant. plants of Electrolux India and acquired Thomson CPT. In 2009, Videocon launched its DTH product, called d2h. VideoconNovember 2009 Videocon launched its new line of Mobile Phones Telecommunications Limited has license for mobile service operations across Today, it has annualIndia. It launched its services on 7 March 2010 in Mumbai revenue of overU$4.1 billion 6

OBJECTIVES OF VIDEOCONE1. To restructure the service network in terms of automation, infrastructure and manpower to meet the best of service requirements and to minimize service response time as per market trends.2. To establish the service organization as a value addition to the brand and to provide total customer convenience and satisfaction at par with or better than the best in the trade.Our Primary Objectives.MISSION STATEMENTThe Videocon group is committed to create a better quality of life for the people and furthering the interests of society, by being a responsible corporate citizen .

Expansion PlansVideocon plans to enter the insurance sector, a growth area for the Indian economy.The company is in talks with three French multinational insurance companies for a possible joint venture for the same.The Indian economy is growing at a very healthy rate of over 8 per cent per annum.Traditionally consumer durables have grown at least three times the GDP growth rate.The company expects the domestic market to grow at least 20 per cent perannum.With the wide product range, an extensive distribution network and strong brand equity it is well positioned to lead the growth in this industry.The organised retail industry is one of the fastest growing segments in the economy.

DIVERSIFICATION STRATEGYWhat is diversification strategy?Diversification is a strategy that takes a company into new markets with new products or services. Companies may choose a diversification strategy for different reasons. Firstly, companies might wish to create and exploit economies of scope, in which the company tries to utilize its exciting resources and capabilities in other markets. This can oftentimes be the case if companies have under-utilized resources or capabilities that cannot be easily disposed or closed. Using a diversification strategy, companies may therefore be able to utilize all its capabilities or resources, and able to attract new business from market segments not catered to earlier.Secondly, managerial skills found within the company may be successfully used in other markets, where the dominant logic and managerial procedures of management can be successfully transferred to other markets.Thirdly, companies pursuing a diversification strategy may be able to cross-subsidize one product with the surplus of another. This way, companies with a very diverse portfolio of products catering to different markets may potentially grow in power, and be able to withstand a prolonged period of price competition etc. When having subsidized one product for a substantial period of time, the company might possibly be able to win a monopoly, making it the only supplier in the respective market.Fourthly, companies may also want to use a diversification strategy to spread financial risk over different markets and products, so that the entire success of the company is not reliant on one market or product only.There may however be other reasons for companies to use a diversification strategy than the four listed above, and companies may very well benefit from a diversification strategy for other reasons.However, it is important for companies to realize the possible danger of diversifying its scope of operations to much. Companies might risk neglecting its core capabilities and become too diversified, where too many different products supplied to different markets might have negative effects on products and services, where e.g. product quality or uniqueness might suffer due to the shift in focus on different products and markets.

Videocones diversification strategy:

The Videocon group's core areas of business are consumer electronics and home appliances. They have recently diversified into areas such as DTH, power, oil exploration and telecommunication. Consumer electronicsIn India, the group sells consumer products like colour televisions, washing machines, air conditioners, refrigerators, microwave ovens and many other home appliances, through a multi-brand strategy with the largest sales and service network in India.Since the entry of Korean Chaebols and their rising popularity in the Indian market, Videocon from a stand-point of market leader has seen a slow decline to become a no 3 player in India. The company continues to do well in the washing machine and refrigerator segment but has significantly lost ground in the consumer electronics space.

Mobile phones In November 2009, Videocon launched its new line of mobile phones. Videocon has ever since launched a number of innovative handsets ranging from basic color FM phones to high-end Android devices. In February 2011, Videocon Mobile Phones launched the revolutionary concept of ZERO paise per second with pre-bundled SIM cards of Videocon mobile services along with 7 of its handset models.Colour picture tube glassVideocon is one of the largest CRT glass manufacturers in the world, operating in Mexico, Italy, Poland and China.

Oil and gasAn important asset for the group is its Ravva oil field with one of the lowest operating costs in the world producing 50,000 barrels of oil per day.It provides 7% of all oil in the private sector in India Planning to enter the oil extraction business; has received some proposals from foreign players. Plans to get into gas distribution in India significantly

DTH In 2009, Videocon launched its DTH product, called 'd2h'. As a pioneering offer in the Indian DTH market, Videocon offered LCD & TVs with built-in DTH satellite receiver with sizes 19" to 42". This concept in the DTH service is relatively new in the presence of other players like ZEE TV's Dishtv, Tata Sky, Air tel Digital TV and Reliance's BIG TV providing only the set top box.

Telecommunication Videocon Telecommunications Limited has license for mobile service operations across India.Videocon is entering GSM Market in a Big way. Both Pre Paid and Post Paid Telecom segment will be targeted. It launched its services on 7 April 2010 in Mumbai.License for 21 circles - Pan India coverage. Its a India 13th mobile operator

POWER PLANT Pipavav Energy Private Limited (PEPL), one of the subsidiaries of the Company, is implementing a Power project in Gujarat, near Pipavav port with a capacity of 1,200 MW.The same plans to set up three more thermal power generating units with a combined capacity of 4,800MW in Maharashtra,Chhattisgarh and Asansol, with a total investment of USD6.5bn2x600 MW of power project in Gujarat near Pipavav port with PIPAVAV ENERGY PRIVATE LTD; generation expected in 20132x600 MW of thermal power project in Chhattisgarh with generation expected in 2011

MERGER STRATEGY: The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock. A merger occurs when two companies combine to form a single company. It is very similar to an acquisition or takeover, except that the existing stockholders of both companies involved retain a shared interest in the new corporation. By contrast, in an acquisition one company purchases a bulk of a second company's stock, creating an uneven balance of ownership in the new combined company. The entire merger process is usually kept secret from the general public, and often from the majority of the employees at the involved companies. Since the majority of attempts do not succeed, and most are kept secret, it is difficult to estimate how many potential mergers occur in a given year. It is likely that the number is very high, however, given the amount of successful ones and their desirability for many companies. There are a number of reasons by two companies may want to merge, some of which are beneficial to the shareholders and some of which are not. One reason, for example, is to combine a very profitable company with a losing company in order to use the losses as a tax write-off to offset the profits, while expanding the corporation as a whole. Mergers and acquisitions are both an aspect of corporate strategy.VIDEOCONE DAEWOO MERGER: The Videocon Daewoo merger took place in October 2006. Videocon Daewoo merger was valued at approximately 700 billion us dollars. Daewoo was the third largest electronics group in south Korea. a consortium lead by Aurangabad based Videocon bid for a 97.5% stake in Daewoo electronics where in Videocon owned 50.1% of the consortium.While the deal provided much needed investment to Daewoo, it also marked Videocon's third successful acquisition.

Business circles though, were abuzz with new of this deal much before it was actually executed. The deal was valued at approximately at 700 billion US dollars an equivalent to almost Rs. 3,300 crores in Indian currency. However it was mentioned that the final price could change after a one month review from the date of agreement.

At the time of this merger, Daewoo, the third largest electronics group in South Korea was severely debt-ridden. Daewoo Electronics was part of the erstwhile Daewoo Group that ran into $80 billion debt in 1999 and ultimately collapsed. Daewoo's decision of a merger or acquisition was driven by the fact that it desperately needed investment to sustain its technology development.

The deal was bagged by a consortium that was lead by Aurangabad based Videocon. The other major partner in the consortium was Ripplewood Holdings, a private equity fund of the United States. The creditors of Daewoo Electronics were also included in the consortium. The consortium had bid for a 97.5% stake in Daewoo Electronics. Videocon, the major partner, owns 50.1 % of the consortium.

The Videocon led consortium was finally chosen based on the following - Complementary nature of business - Videocon is a leader in the Indian electronics industry. Financial consideration Investment commitments Acquisition track recordOn the part of Daewoo the major benefit from the deal was the inflow of much needed investment. Without investments it was becoming increasingly difficult for this South Korean company to continue its operations. On the other hand, it was another feather in the cap of Videocon which had completed two major acquisitions before Daewoo. One was the takeover of the global picture tube business of Thompson for 240 million Euros (approximately Rs 1,260 crore in Indian currency). The other was the cashless takeover of the loss making Electrolux Kelvinator India.

TURNAROUND STARTEGY:

The concept or meaning of turnaround strategy covers following points:1. Turnaround strategy means to convert, change or transform a loss-making company into a profit-making company.2. It means to make the company profitable again.3. The main purpose of implementing a turnaround strategy is to turn the company from a negative point to a positive one.4. If a turnaround strategy is not applied to a sick company, it will close down.5. It is a remedy for curing industrial sickness.6. Turnaround is a restructuring strategy. Here, a loss-bearing company is transformed into a profit-earning company, by making systematic efforts.7. It tries to remove all weaknesses to help a sick company once again become strong, stable and a profit-making institution.8. It tries to reverse the position from loss to profit, from declining sales to increasing sales, from weakness to strength, and from an instability to stability.9. It aids to reduce the brought forward losses of the loss-making company.10. It helps the sick company to stand once again in the market.11. It is a complete U-turn of a planned strategic economic transition.

In general, the definition of turnaround strategy can be stated as follows.Turnaround strategy is a corporate practice designed and planned to protect (save) a loss-making company and transform it into a profit-making one.In financial, commercial, corporate or from a businessperspective, the turnaround strategy can be defined as follows.Turnaround Strategy is a corporate action that is taken (performed) to deal with issues of a loss-making (sick) company like increasing losses, lower return on capitalemployed, and continuous decrease in the value of its shares.Finally, from an academic point of view, its definition can be stated as under.Turnaround strategy is an analytical approach to solve the root cause failure of a loss-making company to decide the most crucial reasons behind its failure. Here, a long-term strategic plan and restructuring plans are designed and implemented to solve the issues of a sick company.

VIDEOCONS TURNAROUND STRATEGY: In 1998, the brothers Dhoot who run Videocon-Venugopal Nandalal Dhoot, Rajkumar Nandalal Dhoot, and Pradeepkumar Nandalal Dhoot-were divided over the sale of the group's loss-making glass-shell manufacturing facility in Vadodara, Videocon Narmada. VND and RND, as the brothers are referred to within the group, were all for selling it, but PND, the youngest of the three, and the man in-charge of Videocon's high-profile consumer durables business demurred. Videocon Narmada, he argued, was critical to the group's core business, the manufacture of colour televisions (CTVs), and took on the responsibility of turning its fortunes around.That he did. Today, the glass-shells contribute their significant mite to the group's cost-leadership position in the CTV business. And PND has been able to author a comeback script for Videocon, which, if marketing wunderkind Kabir Mulchandani's published age is correct, built its reputation as a price warrior when the latter was still in school.To attempt a quick recap of those glorious days: Videocon boasted the largest share in the colour television market for eight years running, and at its peak, in 1994, the company's marketshare was 26.7 per cent. Then, other price warriors like Baron International-whose first offering, Akai, is now ironically part of the Videocon stable-and Aiwa entered the market, as did transnationals like Sony, LG, and Samsung, and it found itself caught in a rapidly shrinking middle. By June, 1999, Videocon's once impressive share had shrunk to 12 per cent.It wasn't just external forces that contributed to Videocon's winter. In the mid-1990s, the group embarked on an ambitious diversification programme. The Dhoots are silent on this, but the move may have been prompted by the need to have enough businesses for the three brothers to manage-it isn't unknown for family managed groups in India to diversify into a new area, just to provide another member of the family with a business to run. Or, it could have been the group's response to the realisation that its competitiveness in the consumer durable business would soon be undermined by competitors.The diversifications didn't pay off: Videocon burnt its fingers in real estate and power. Precious cash was diverted to these projects, but they did not yield the expected returns.Just as everyone was writing off Videocon, the group bounced back. On the strength of a restructured organisation, a new distribution network, a clutch of new launches, manufacturing-plus-marketing arrangements with transnational brands like Akai and Sansui, and aggressive pricing, it has cornered a third of the CTV market by its own estimates. Its eponymous brand has improved its share from 12 per cent in 1999, to 15.5 per cent in 2000, and 18 per cent in the first half of this year; Sansui has a 7 per cent share of the market (up from 5.5 last year), and Akai, 6 per cent (4.5 per cent in 2000). Even figures put out by ORG-MARG grant that the group's share of the CTV market have increased.Through this period, Videocon has managed to retain its grip on the markets for refrigerators (market share: 15.5 per cent) and washing machines (40.9 per cent), and Kenstar-the group's small appliances brand-has managed to make inroads in a predominantly unorganised market.Videocon International's revenues for the year ended March 31, 2001 were a respectable Rs 3,251.23 crore; its earnings, Rs 151.44 crore. Better still, estimates for 2002 are an impressive Rs 3,500 crore in sales and Rs 150 crore in profits. Says V.N. Dhoot, Chairman, VIL: ''Margins are coming down. Only those who can increase sales and retain profits in the next three years will survive".

Chronicle of a comebackThe comeback has, predictably, brought out the worst in competitors. ''When you cut prices, you gain market share. We can also do the same, but what's the point?'' asks one. But PND thinks that factors other than price helped Videocon regain marketshare: ''Forty per cent of the gains come from the restructuring of the organisation, 25 per cent from price-cuts, and 10 per cent, the new media strategy we have adopted.'' The rest? Well, put that down to Dame Luck smiling on the Dhoots. Numbers lend credence to PND's version. Despite the drop in prices, VIL was able to retain its net profit margins of around 5 per cent.PND's comeback blueprint had all the ingredients of typical restructuring plans and then some. Branch offices that had in the past had their targets laid out for them by the corporate centre, suddenly found themselves free to define their own sales objectives and dealer incentives (within a prescribed limit). A sap ERP package helped improve business processes. And PND realised that he couldn't take all the decisions, not when it involved producing 1,200,000 CTVs a year, and managing four brands and eight sub-brands. So, he appointed a Chief Operating Officer for each of the manufacturing operations (consumer electronics, washing machines, and airconditioners), and each of the three brands, Videocon, Sansui, and Akai. For good measure, he also appointed a COO in-charge of exports, which account for 9 per cent of the group's Rs 3,218 crore revenues. ''I don't handle everything,'' says PND. ''The coos draft their own business plans. I just monitor them.'' But corporate finance is still handled by VND, and PND keeps a close tab on operations and cashflow.By focusing on its channel organisation, Videocon has been able to increase the proportion of sales that come from dealers it reaches directly from 40 per cent to 60 per cent. The higher the ratio, the better it is for the company's bottomline: all consumer durables manufacturers give their dealers cash discounts and a credit period of between 30 and 45 days; the more the proportion of sales that happen through direct dealers, the higher the efficiency of the collection process. Explains S.K. Palekar, the Senior Vice-President in-charge of marketing at Eureka Forbes, and a former chief of marketing at Mirc Electronics: ''This isn't a marketing business, but a financing one. The skill lies in rotating your money.'' And any increase in the efficiency of the collection process, provides Videocon with that much more leeway to cut prices.Everything adds up: the group produces key inputs that account for 37 per cent of the cost of a television in-house, and this contributes a 6.5 per cent savings on raw material costs, and that's just the direct tax component. More than backward integration, though, it is smart sourcing-imports account for 25 per cent of the cost of a CTV-that helps Videocon be the cost leader it is. Taking a leaf from the auto business, Videocon sources all its imports through a Tier 1 supplier, Nissei Sangyo, a Japanese company that services the consumer electronics major from its hub in Singapore. The result? Videocon, which used to stock 35 days of production as inventory, now does 17.

Homegrown consumer durable and appliances firm Videocon Industries is looking at regaining lost ground. The firm under the aegis of Anirudh Dhoot, 34, the younger son of chairman and MD Venugopal Dhoot, hopes to drive business to newer heights through technologically advanced products, which it believes will be its unique selling point. To begin with, the company launched a LCD TV bundled with DTH and internet chip which does not need a set top box.Videocon has always been ahead of times, even when they launched Internet television 10 years ago. Though,they have realised that the timing of the launch is important to stay ahead in the game, After spending 10 years in the company, Anirudh is now actively taking charge to drive the consumer electronics and the appliances business. Over the last few years, Videocon Industries has seen stagnation set in its business on the revenues side even as its net profit has taken a dip. Its net profit dipped 21.3% to R429.1 crore for the period 2011-12 as compared to the year-ago period. The companys sales dipped 1.4% to R12,733 crore for the period 2011-12 even as it had dipped 12% to R12,919 crore a year ago. While the task to take Videocon Industries to newer heights is uphill, Dhoot believes a turnaround is possible. However, he refused to give any forward-looking targets.At present the consumer durables and the appliances business is about 40% of the total Videocon conglomerate sales of about $4 billion. Our strategy is to deliver better technology in the consumer business which will help improve marketshare, he said .We are in a healthy situation with not much to worry about. There are a lot of opportunities to grow and we are working on new technology-based launches across our portfolio including washing machines, refrigerators, and more. The idea is to scale up significantly through retail presence and better products, he said.While, at present, Videocon sees majority of its sales coming from tier 2 and 3 cities, the firm is looking at capturing marketshare in urban areas with new technology heavy product launches. The company has launched LED TVs, which allow consumers to receive digital signals without a set-top box. The device also doubles up as an internet device. Other categories such as refrigerators and air conditioners, segments where Korean and Japanese companies have captured marketshare are the next area of focus.

CONCLUSION:Productivity and quality improvement is an on going and countinues process and every organization should try to adopting a new tools and technologies for the countiues process.

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