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DEVI AHILYA

VISHWAVIDYALAYA

INDORE

SCHOOL OF COMMERCE

SESSION 2008-11

A

Project Report onMARKET SURVEY ON CONSUMER

ELECTRONIC INDUSTRY IN INDIA

Under the guidance of: Submitted by:

Mr.Kapil Sharma Batul Kudrati

MBA (FT) 5 yrs VI SEM

DX-08-2209

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CERTIFICATE

This is to certify that the project work done on Market Survey On

Consumer Electronic Industry in India, submitted to School of

Commerce, DAVV, Indore by Ms. Batul Kudrati in partial fulfilment

of the requirement for the award of Degree of Masters of Business

Administration (Integrated) in Foreign Trade is a bonafide work carried

out by her under my supervision and guidance. Certified further, to the

best of my knowledge that the work reported here in does not form part

of any other project report or dissertation on the basis of which a degreeor award was conferred on an earlier occasion on this or any other

candidate.

Mr.Kapil Sharma Dr. L.K. Tripathi

Guide/Supervisor Head of Department

Date: School of Commerce

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DECLARATION

I, Batul Kudrati, hereby declare that the project work titled Market Survey on

Consumer Electronic Industry in India submitted to School of Commerce,

DAVV, Indore is an original work of mine done under the guidance ofMr.Kapil

Sharma in requirement for the award of my degree of MBA (Integrated) and the

research done in this report has not been submitted to any other university or

institute before.

Place: Indore Name: Ms Batul Kudrati

MBA [FT] 5 yrs.

Date: VI Sem.

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ACKNOWLEDGEMENT

I owe great thanks to my faculty, Mr.Kapil Sharma (Institute of Management

Studies) who guided me throughout my report work related with Market Survey on

Consumer Electronic Industry in India which plays an import role in export from

India and he also gave his valuable time for suggesting modifications with

attention and care.

I would also like to express my sincere thanks to my Head of the Department,

Dr.L.K. Tripathi, who supported me during the work.

I am also grateful to the staff and other faculty members of School of Commerce

and also to my friends for their support.

Batul Kudrati

Date:

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PREFACE

The worldwide electrical and electronic and computers industry is the mostflourishing and extremely diversified sector consisting of manufacturers, suppliers,dealers, retailers, electrical engineers, electricians, electronic equipmentmanufacturers, and trade unions. This sector has been growing at a rapid pace withthe invention of innovative technologies and an ever-increasing customerinclination towards electronic goods and services.

The Indian industry constitutes less than 1% of the global market. However,demand for these products is growing rapidly and investments are flowing in toaugment manufacturing capacity. The consumer electronics segment, which has

grown at a CAGR of 10% in the last five years, includes a wide range of productssuch as DVD, VCD/MP3 players, television sets and microwave ovens.

Thus, I have undertaken this research project to determine the factors for growth ofthis industry in India as well as to determine the major player in the consumerelectronics segment of this industry.

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OBJECTIVE

To determine the strength, weakness, opportunities and threat ofIndian consumer electronic industry.

To determine the major market player in the consumer electronicindustry

To understand the industry characteristics

To study and analyze the various government policies and

initiatives towards the sector.

To study the impact of the sector on the Indian economy.

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RESEARCH METHODOLOGY

This research is based on observation and survey method.

Survey would be conducted with the help of questionnaires.

All published and non-published data available on the subject

matter will be consulted.

Secondary data available with different organizations

website contributing towards this sector will also be

considered.

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INDEX

Topics Page No.

Certificate 2

Declaration 3

Acknowledgement 4

Preface 5

Objective 6

Research Methodology 7

Chapter 1: INDIAN ELECTRONICINDUSTRY

13

1.1 Historical Developments 14

1.2 Current Scenario 15

1.3 Production Profile 16-19

1.4 Size and Growth of Indian Electronic

Industry

20

1.5 Indias Export of Electronic Goods 21-23

1.6.Growth Drivers 24

1.8 Government Initiatives 25

Chapter 2: Key Segments of Indian

Electronic Industry

26

2.1 Computer Industry 27-29

2.2 Industrial Electronics 30-31

2.3 Communication and Broadcasting

Equipments

32-33

2.4 Strategic Electronics 34-35

2.5 Electronic Components 36-37

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2.6 Key Players 38

Chapter 3 : Consumer Electronics

Industry in India

39

3.1.Consumer Electronic Industry 40-41

3.2. Colour Television Market in India 42-44

3.3 Refrigerator Market in India 45-46

3.4 Washing Machine Market in India 47-48

3.5 Microwave Market in India 49

3.6 Air Conditioner Market in India 50

3.7 Indian Export of Consumer Electronics 51-52

3.8.Key Success and Risk Factors for

Consumer Electronic Industry

53

3.9. Favourable Demand Conditions for

Growth

53-54

3.10 Scope 54

Chapter 4 :Major Players in Indian


55

4.1 Major Domestic Players 56-59

4.2 Major International Players 60-63

Chapter 5 ; SWOT Analysis 64

5.1 Strengths 65

5.2 Weakness 66

5.3 Opportunities 67

5.4 Threats 68

Chapter 6 : Survey 69

6.1.Survey Method 709


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Chapter 7 :Analysis and Findings 71-

Chapter 8 : Conclusion and Suggestions

Annexure

References

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Charts, Diagrams and Graphs

Exhibit Page no.

Exhibit 1: Evolution of Indian Electronic

Industry

14

Exhibit 2: Electronics and IT Production

Profile

16

Exhibit 3: Production and Growth trend of

the Indian Electronics and IT-ITeS industry

16-17

Exhibit 4: Major Production Clusters 19

Exhibit 5: Size of Indian Electronic Industry 20

Exhibit 6: Indian Electronics Industry

Projections, 2010-2020

20

Exhibit 7: Electronics&IT Exports 21

Exhibit 8: Growth in Exports of Electronics

$ Computer Software / Services

22

Exhibit 9: Share Electronics, ComputerSoftware/Services in Indias Total Export

22

Exhibit 10: Major Destinations forElectronics & Computer Software / Services

23

Exhibit 11: Computer Sales and Growth 27

Exhibit 12 :Market size and growth of otherIT Hardware Equipment

28

Exhibit 13: COMPUTER HARDWAREPRODUCTION

28

Exhibit 14:INDUSTRIAL ELECTRONICS

PRODUCTION

30

Exhibit 15:Communication andBroadcasting sector Production

33

Exhibit 16 :STRATERGIC ELECTRONICS

PRODUCTION

35

Exhibit 17:Electronic Components 36

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Production

Exhibit 18:Key Players in the Indian

Electronic Industry

38

Exhibit 19: Growth in the Consumer

Electronic Industry

41

Exhibit 20: Consumer ElectronicsProduction Profile

41

Exhibit 21: Projected market Growth fortelevision industry

42

Exhibit 22: Projected Market Sales fortelevision industry

43

Exhibit 23: Projected sales of refrigerator 45

Exhibit 24: Growth in Export of ConsumerElectronics

51

Exhibit 25 :Most Preferred Brand in

Consumer Electronics

72

Exhibit 26: Most Preferred Brand inRefrigerator market

72

Exhibit 27: Most Preferred Brand inTelevision Market

73

Exhibit 28: Most Preferred Brand in

Washing Machine Market

73

Exhibit 29: Most Preferred Brand in

Microwave Market

74

Exhibit 30:Most Preferred Brand in AirConditioner Market

74

Exhibit 31: Most Preferred Brand in MobileIndustry

75

Exhibit 32 :Most Preferred Brand inComputer/Laptop Industry

75

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CHAPTER 1

INDIAN ELECTRONIC

INDUSTRY

INDIAN ELECTRONIC INDUSTRY

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Historical Developments

The Electronics Industry in India took off around 1965 with an orientation towards spaceand defence technologies. This was rigidly controlled and initiated by the government.

This was followed by developments in consumer electronics mainly with transistorradios, Black & White TV, Calculators and other audio products. Colour Televisionssoon followed. In 1982-a significant year in the history of television in India - thegovernment allowed thousands of colour TV sets to be imported into the country tocoincide with the broadcast of Asian Games in New Delhi. 1985 saw the advent ofComputers and Telephone exchanges, which were succeeded by Digital Exchanges in1988. The period between 1984 and 1990 was the golden period for electronics duringwhich the industry witnessed continuous and rapid growth. From 1991 onwards, therewas first an economic crises triggered by the Gulf War which was followed by politicaland economic uncertainties within the country. Pressure on the electronics industry

remained though growth and developments have continued with digitalisation in allsectors, and more recently the trend towards convergence of technologies. After thesoftware boom in mid 1990s India's focus shifted to software. While the hardware sectorwas treated with indifference by successive governments. Moreover the steep fall incustom tariffs made the hardware sector suddenly vulnerable to internationalcompetition. In 1997 the ITA agreement was signed at the WTO where India committeditself to total elimination of all customs duties on IT hardware by 2005. In the subsequentyears, a number of companies turned sick and had to be closed down. At the same timecompanies like Moser Baer, Samtel Colour, Celetronix etc. have made a mark globally.

Exhibit 1: Evolution of Indian Electronic Industry

Current Scenario

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The electronic hardware and components industry has emerged as one of the dynamic,vibrant, diversifying and expanding manufacturing sectors in India. There has been asignificant rise in the disposable surplus income with the middle class families in India.Their growing tech-savvy culture, passion for latest fashion and purchasing power isfuelling a high demand for hi-tech high-end consumer electronic products, particularly

home entertainment systems, high resolution LCD / Plasma TVs, audio-video equipment,telecom products including mobile phones, IT hardware, domestic white goods etc. As aresult, the Indian electronic industry has been diversifying its product range, andexpanding its manufacturing base in India.

India now offers a huge potential and opportunity as a market as well as a manufacturingbase to cater not only to the growing domestic market but also to the global market. Thetotal electronic hardware and components market in India is estimated US$ 363 billion,according to Frost and Sullivan. By 2015, the TAM (Total Available / AccessibleMarket) for the local Indian manufacturing industry is US$ 158 billion.The electronic

industry in India constitutes just 0.7 per cent of the global electronic industry. Hence itis miniscule by international comparison. However the demand in the Indian market isgrowing rapidly and investments are flowing in to augment manufacturing capacity.

The emergence of a business-friendly economic environment in India has attractedalmost all major consumer electronics players from South Korea, Japan, USA, Germany,UK, and China etc. They import as well manufacture locally to sell in the large domesticIndian market. Indias burgeoning software sector is generating huge demand for IThardware and components in the domestic market.

Production Profile

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Exhibit 2: Electronics and IT Production Profile

The performance of Electronics & IT-ITeS industry in 2010-11 was marked by sustainedrecovery and resurgence in growth momentum. The total production of Electronics & IT-ITeS Industry is estimated to grow at 13.1 per cent in 2010-11 as against 11.6 per cent in2009-10. This increase in growth is attributed mainly to the accelerated growth ofsoftware and service industry, which is export driven and continues to dominate theelectronics and IT industry. In 2010-11 the Indian software and services exports industrywitnessed a surge in the growth. The total value of software and services exports isestimated at 269,630 Crore (US $ 59.0 billion) in 2010-11 as compared to 237,000 Crore

(US $ 50 billion) in 2009-10, an increase of 13.8 per cent in rupee terms and 18.0 percent in dollar terms. The production and growth trend of the Indian Electronics and IT-ITeS industry since 2005-06 has been as follows:

Exhibit 3:Production and Growth trend of the Indian Electronics and IT-ITeS

16

Year Production

( Crore)

Growth (1%)

2005-06 190,300 24.9

2006-07 244,000 28.3

2007-08 295,820 21.2

2008-09 372,450 25.9

2009-10 415,520 11.6

2010-11 470,090 13.1


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The above table indicates that Electronics and IT-ITeS industry has not only overcomethe adverse impact of severe global recession but also staged a remarkable recovery in2010-11. Software and services exports, which constitute about 57 per cent of Electronicsand IT-ITeS industrys revenue aggregate has returned to double digit growth trajectory

in 2010-11. The production performance of various industry groups in the ElectronicsHardware and Software & Services Sector in 2010-11 is given below

Electronic Contract Manufacturing / Electronic

Manufacturing ServicesIndia is fast emerging as one of the leading hubs for Electronic Contract Manufacturing(ECM) / Electronic Manufacturing Services (EMS) and Original Developer

Manufacturing (ODM) in the South Asian Region. The leading Indian companies in thissegment include Flextronics, SGS Tekniks Manufacturing Pvt Ltd, Solectron, Celestica,TVS Electronics, D-Link, Benchmark Electronics, Fusion Electronics Pvt Ltd, EpitomeComponents Ltd, Syrma Technology Pvt Ltd, Digital Circuits Pvt Ltd, DixonTechnologies India Pvt Ltd and many more.They provide a full spectrum of value added services including circuit design,prototyping from boxed products to SMT / PTH PWBAs , IP core designing, chipdesigning, DSP in VLSI, Embedded in VLSI, Flex PCB & assemblies, RFID passiveTags, Magnetic components, Flex circuits, single and double sided, MPEG cards, singleand double sided as well as multi layer printed circuit boards etc.Because of cost advantages, on time delivery, superior quality etc, OEMs from industrialelectronics, office automation, automobile, power electronics, IT, telecom productsectors etc are outsourcing their requirements from India.

India Emerging as a Major Manufacturing Base in

Asia:India is emerging as a major manufacturing base in the area of consumer electronics andtelecom equipment. Major international players like Nokia, Motorola, Siemens, TexasInstruments, Matsushita, Alcatel, LG, Samsung, and Lenovo have already set upmanufacturing operations in India. They have also set-up R & D centers in India. Thisgrowth has attracted global players to India and leaders like Solectron, Flextronics, Jabil,

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Nokia, Elcoteq and many more have made large investments to access the Indian market.In consumer electronics Korean companies such as LG and Samsung have madecommitments by establishing large manufacturing facilities and now enjoy a significantshare in the growing market for products such as Televisions, CD/DVD Players, Audioequipment and other entertainment products. The growth in telecom products demand

has been breathtaking and India is adding 2 million mobile phone users every month!With telecom penetration of around 10 per cent, this growth is expected to continue atleast over the next decade. Penetration levels in other high growth products are equallyhigh and growth in demand for Computer/ IT products, auto electronics, medical,industrial, as well as consumer electronics is equally brisk. Combined with lowpenetration levels and the Indian economy growing at an impressive 7 per cent perannum, the projection of a US$150 Billion+ market is quite realistic and offers anexcellent opportunity to electronics players worldwide.

The growth in telecom products demand has been breathtaking and India is adding 2

million mobile phone users every month! With telecom penetration of around 10 percent, this growth is expected to continue at least over the next decade. Penetration levelsin other high growth products are equally high and growth in demand for Computer/ ITproducts, auto electronics, medical, industrial, as well as consumer electronics is equallybrisk. Combined with low penetration levels and the Indian economy growing at animpressive 7 per cent per annum, the projection of a US$150 Billion+ market is quiterealistic and offers an excellent opportunity to electronics players worldwide.

Regional spread of Indian Electronic units

Indias electronics hardware industry is concentrated in 3 main regions --- the NorthernRegion around Delhi, the National Capital of India which accounts for 37% of the output.The Western Region around Mumbai and Pune accounts for 25% and the SouthernRegion, which is mainly around Bangalore, Hyderabad and Chennai, accounts for 32% ofthe output. Bangalore has much concentration of public sector units and organsied privatesector players, partly linked to the presence of Indian defence establishments in the city.

There are more than 3500 units in both organized and unorganized sectors in India whoare engaged in manufacturing of electronic goods as diverse as audio / video products,

TV tubes, test and measuring instruments, medical electronics equipment, analytical andspecial application instruments, process control equipment, power electronics equipment,office equipment, electronic components, strategic electronics, telecom products andequipment. The electronics industry employs more than 400,000 persons in both theorganized and unorganized sectors.

Major production clusters18


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Exhibit 4: Major Production Clusters

SIZE AND GROWTH OF INDIAN ELECTRONIC

INDUSTRY

Exhibit 5: Size of Indian Electronic Industry

19

City State

Ahmedabad Gujarat

Bengaluru Karnataka

Gurgaon Haryana

Hyderabad Andhra PradeshMumbai Maharashtra

Noida Uttar Pradesh

Pune Maharashtra

Chennai Tamil Nadu


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Exhibit 6: Indian Electronics Industry Projections, 2010-2020

INDIAS EXPORT OF ELECTRONIC GOODS

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Electronics and Computer Software /

Services Exports

During the year 2010-11, electronics and IT exports are estimated to be 295,530 Crore,

as compared to 262,900 Crore in 2009-10 showing a growth of 12.4 per cent. Thesoftware and services exports witnessed a robust recovery. The total value of softwareand services exports are estimated at 269,630 Crore in 2010-11, as compared to 237,000Crore in the year 2009-10, an increase of about 13.8 per cent.

Exhibit 7:Electronics&IT Exports

Exhibit 8: Growth in Exports of Electronics $ Computer Software / Services

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Share of Electronics and Computer Software /Services export in Indias total export.

Indias overall export during the year 2008-09 is estimated to be Rs. 1355049 crore (US$294.64 billion). Indias Electronics and Computer Software / Services export valued atRs. 259060 Cr (US$ 56.33 billion) accounts for a share of 19.12 percent in Indias over allexport during the year 2008-09.

Exhibit 9: Share of Electronics, Computer Software/Services in Indias Total

Export

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Major Destinations for

Electronics & Computer Software / Services

Exhibit 10: Major Destinations forElectronics & Computer Software / Services

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THE GROWTH DRIVERS

Behind the impressive growth of the electronics industry is the robust and consistent

growth in Electronic Hardware market of approximately 25 per cent due to a stableeconomy & large middle class of 350 million people. The fastest growing segments aredemand for telecom services particularly cell phones, internet subscribers & growth indemand for its products with increasing penetration of computers, falling prices &Government support to rapidly encourage usage of IT in all sectors. Within next 5 yearspenetration of telephone users (both landline & mobile) is projected to increase from 100to 500 per thousand while PC's increase from 10 to 30 plus per thousand. Some of theother factors are

Highly talented workforce, especially for design and engineering services with goodCommunication skills.

Rising labor costs in China. Presence of global Electronics Manufacturing Services (EMS) majors in India and theirplans for increased investments in India.

More outsourcing of manufacturing by both Indian and global Original EquipmentManufacturers

Indias Advantages:

Abundance of technically qualified skilled manpower at competitive rates;

Industry friendly socio-political business environment in the country;

Forward looking investment friendly Governments Incentive Package Schemes;

Fast growing Indias domestic market;

Propensity of consumers for branded products, components and accessories; and

Indias fast growing technical capability to emerge as the highly sophisticated andtechnologically advanced production facilities for sub-assemblies andmanufacturing services, ancillaries / accessories for OEMs from industrialelectronics, power electronics, IT, automobile, office automation, aviationelectronics sectors etc as per the buyers designs & technical specifications,process know how etc under the Electronic Contract Manufacturing or EMS.

Government Policy Initiatives:24


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100 % Foreign Direct Investment is allowed under the automatic route with a fewexceptions such as Aerospace and defence equipment manufacturing whichrequires a specific approval from the Government of India.

The Government of India has recently announced a progressive semi-conductorpolicy which provides :

-Special Incentive Package for setting up semi-conductor fabrication and othermicro and nano technology units; and- Incentives of up to 20 % subsidy towards capital expenditure

Electronic Hardware Technology Parks set up to encourage investments in thissector in several States ( Chennai, Bangalore, Cuttack )

The Government of Indias Special Incentive Package Scheme ( SIPS ) aims atkick starting semiconductor wafer fabrication and its associated downstream orupstream investments for manufacturing of semi-conductor grade silicon orwafers, liquid crystals, light emitting diodes, plasma display panels, storagedevices, solar cells, photo voltaic, nano and micro technology products. Govt.incentives include 20 % subsidy on the capital expenditure made during the first10 years for facilities established in Special Economic Zones (SEZ) or 25 % forfacilities built outside SEZs. The investment threshold for fabs is Rs 2500 crores(about US $ 600 million) and Rs 1000 crores (approx. US $ 240 million) forassociated ecosystems.

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CHAPTER 2

KEY SEGMENTS OFINDIAN ELECTRONIC

INDUSTRY

KEY SEGMENTS OF INDIAN

ELECTRONIC INDUSTRY26


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COMPUTER INDUSTRY

Computer Hardware

India is one of the fastest-growing IT systems and hardware market in the Asia-Pacificregion. Most of the prominent global vendors and some locals have strong presence inthe Indian market. Most MNCs have their assembly units in India. BFSI (Banking,

Financial Services and Insurance), telecom, ITeS (Information Technology enabledServices), manufacturing verticals, Small & Medium Enterprises (SMEs), e-Governanceand households are the key drivers of the IT systems and hardware market in India. Withsignificant IT adoption plans on the anvil, the IT systems and hardware market isexpected to expand rapidly in the ensuing years. PC sales are expected to record a growthof 12 per cent in 2010-11 to touch 9.7 million. The Notebook sales are estimated to be3.5 million in 2010-11 against 2.5 million in 2009-10, a growth of 40 per cent. Thisshows that Notebooks have caught the fancy of the consumers. Desktop sales areexpected to reach 6.2 million in 2010- 11 against 5.5 million in 2009-10, a growth of12.7%

Exhibit 11: Computer Sales and GrowthCOMPUTERSALES

2009-10 2010-11 GROWTH

NOTEBOOKS 2.5 MILLION 3.5 MILLION 40%

DESKTOP 5.5 MILLION 6.2 MILLION 12.7%

PERSONALCOMPUTER

7.5 MILLION 9.7 MILLION 12 %

As regards servers, sales posted a growth of 41 per cent during second quarter 2010-11

on account of the easing of the Economic slowdown. Establishments which had beenpostponing their major IT purchases in last few quarters are now ready to invest in IT,which could be the major reason for the growth in the server sales. The Server market isexpected to register positive growth in the future as the Server market expands to smallercities and Small and Medium Businesses (SMBs). The small city growth is largelyfuelled by the larger organizations strengthening their base in smaller cities on account of

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cost advantages. The SMB growth is largely fuelled by the adoption of nontraditionalbusinesses like education, retail, healthcare & hospitality, etc.

Exhibit 12: Market size and growth of other IT Hardware Equipment

PRODUCT MARKET SIZE GROWTHServers 90,000 units About 1%

Routers and Switchers US $ 320 million and US $440million respectively

36% and 25% respectively

Hubs 192,000 units 33%

Network interface Cards 4.2 million units 15%

Modems 0.85 million units 43%

Notwithstanding this surge in PC sales, domestic production is estimated to remain flat in2010-11 at 14,970 Crore. This is largely due to decelerating growth in exports,substitution of domestic production by cheaper imports and rising input cost.

Exhibit 13: COMPUTER HARDWARE PRODUCTION

Key Success and Risk Factors for Computer Industry

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Key Success Factors

Newer and sleeker products

Effective distribution model Competitive pricing

Key Risk Factors

Easy replicability

Large number of fakes

Grey market

Excess capacities in Taiwan,Malaysia, etc.

Demand Drivers

Following are the major demand drivers of the computer industry :

Increasing household income

Domestic demand by Indian companies

e-Governance initiatives under the National e-Governance Program (NGEP) IT based education in India

Growth of IT and ITES industry

Industrial Electronics

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This segment of Electronics/IT industry includes critical hardware technologies andsystems with built-in software. It is a very challenging area which is multi-disciplinary innature requiring high level of technical skill in designing systems for applications in avariety of industrial sectors of the economy. Whereas we have a good amount ofexpertise in conceptualizing such systems and its erection and commissioning, the sector

is very largely dependent on import of critical hardware and associated software. Largeprojects are implemented with total import of C&I packages from abroad without anyknowledge of its design. In most cases, this leads to higher initial cost and a much highermaintenance cost in the long run. This process is continuing for a long time now.

The important devices used in this segment relate to power electronics, medicalelectronics and other intermediates like semiconductor. Semiconductors are integral partof most medical equipments, starting from high end imaging to small hand held devices.The estimated production figure for this segment for 2010-11 is 18,190 Crore as against15,160 Crore in 2009-10, a growth of about 20 per cent.

Growth in industrial production and focus by industry on better controls, processes andsystems are expected to drive growth in this segment in the future.

Exhibit 14:INDUSTRIAL ELECTRONICS PRODUCTION

This segment continues to be an important constituent from the perspective ofapplications for electronics and IT. Manufacturing of related hardware in technologyareas like PLC, distributed control systems, UPS, varied power electronic equipment andsystems has been increasing in the country. Newer technologies involving wireless30


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sensors and sensor networking are rapidly emerging as potential application in the fieldof industrial electronics on account of ease of installation and cost competitiveness.The Industrial Electronics industry would be driven by sustained GDP and Industrialgrowth.

Key Success and Risk Factors

Key Success Factors:

Design capabilities and R&D Addressing export markets through EMS

Quick adoption of high techmanufacturing (SMT, nanotechnology,etc.) Developing capabilities beyond low end manufacturing and assembly, moving up

the value chain

Key Risk Factors:

Regulatory risks (especially telecom)

Managing electronic waste and consequent environmental hazards

Communication and Broadcasting

Equipments

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Telecommunication equipment is the second fastest growing segment after IT hardware.The estimated production of this segment in FY2009 was Rs. 260 billion. The segmentincludes digital exchanges (EPABX, RAX, TAX and MAX), transmission equipment(HF/VHF/Microwave trans-receivers), satellite communication terminals, optical fibrecommunication equipment, two-way radio communication equipment.

Telephone Sector

Communication Technology is a key driver for development and growth. India is thirdlargest in the world in terms of gross telephone subscribers, and second largest in Asia.The gross telephone subscribers in the country reached 787.28 Million at the end ofDecember, 2010. Total wireless subscribers are 752.19 million as on December, 2010.The total Wireline subscribers are 35.09 million as on December, 2010. The overall Tele-density in India reached 66.16 per cent in December, 2010 with overall urban and rural

tele-densities being 147.88 and 31.18 respectively. The total broadband (256 kbpsdownload) subscriber base of India is 10.92 million in December, 2010. The FM radiopolicy has been well received and there are a total of 248 channels operated by 42operators in 84 cities at the end of September, 2010.

DTH Sector

Besides the free DTH service of Doordarshan, there are 6 private DTH licensees, offeringtheir services to the DTH subscribers. As on 30.9.2010, their reported subscriber base is26.44 million. It is set to overtake the US as the largest DTH market in the world by

2012. This segment is expected to add 10-12 million subscribers every year. DTH withits digital picture and sound quality is able to deliver a much better performance vis-a-visthe analog cable operators. The growth is from both the urban area (where subscribers aremoving away from cable) and rural area (where cable has not reached). Localmanufacturing of Set-Top Box has now commenced and is meeting about 25 per cent ofthe total requirement of the DTH industry. Number of Set Top Boxes (STBs) installed inCAS notified areas of Delhi, Mumbai, Kolkata and Chennai increased from 7,70,519 inJune-2010 to 7,75,876 in September-2010. The estimated production figure for thissegment for 2010-11 is 32,550 Crore as against 31,000 Crore in 2009-10, a growth ofabout 5 per cent.

Mobile Sector

Communication technology has taken a big leap forward and received nationalrecognition as a key driver for development and growth. India has taken a leadingposition in the mobile handsets market. Mobile subscriber base has crossed 300 millionand is expected to touch 500 million by 2010. Then number of active internet entities11is expected to be 8.6 million in March 2009. Some of the world renowned mobile set

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manufacturers, like Motorola, Samsung, Sony Ericsson and LG have set up productionbases for mobile handsets in the country .Recently; the segment has seen a number ofservice providers such as MTS, Swan, and Virgin entering the segment, increasing thedemand for telecommunication infrastructure products and services.

Exhibit 15: Communication and Broadcasting sector Production

Demand Drivers for this Industry

Following are the major demand drivers of this industry:

Increasing mobile penetration to B and C circles with mobile connectionstouching 500 million in 2010

Increasing number of wireline and wireless broadband (Broadband WirelessAccess/Wiremax) users.

Demand for the Customer Premises Equipment and Fibre to Home are likely todriven in the long run.

Strategic Electronics

The strategic electronics segment envelops satellite based communication, navigationand surveillance system, radars, navigational aids, sonars, underwater electronic system,infra-red based detection and ranging system, disaster management system, internal33


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security system, etc. The Indian strategic electronic industry has been able to meet thebulk of the requirements of Indias defence and paramilitary forces. Indias defence,aerospace and nuclear sectors are poised for substantial growth on the back of economicgrowth and the need to maintain national and energy security. The role of IT in defence isexpanding with the new focus on cyber security. Driven by geo-political considerations,

India is expected to be one of the top-5 markets for defence equipment by 2015.Similarly, economic growth and a focus by commercial aircraft manufacturers on low-cost countries are expected to create growth in the aerospace market in emerging marketsin general and India in particular. The civilian nuclear agreement between the US andIndia will enable commerce and cooperation, in particular allowing India to collaboratewith global companies on nuclear projects. India has an opportunity to play an importantrole in this global phenomenon.

The Government feels that it is desirable to focus on production in the strategicelectronics sector to ensure acquisition of the state-of-the-art technology. The sector is

increasingly facing problems in attracting and retaining talent. There is also a trendtowards outsourcing/sub contracting and privatisation. At the national level, variousresearch institutions are developing strategic systems and public sector undertakings andsome private agencies are contributing towards production. Estimatedproduction of this sector in 2008-09 was Rs. 68 billion.The estimated production figurefor this segment for 2010-11 is 7,680 Crore as against 6,980 Crore in 2009-10, a growthof about 10 per cent.

Exhibit 16 :STRATERGIC ELECTRONICS PRODUCTION

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Demand Drivers of Strategic Electronics Industry

Following are the major demand drivers of this industry:

Sustained GDP growth.

Increasing defence spending.

Major private participation from the likes of TATA group nad Mahindra group isunderway.

Electronic Components

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ferrites. The growth of electronic components depends on the growth of the otherconstituents of IT Hardware and Electronics sector to which it supplies.

The worlds top five mobile handset makers - Nokia, Motorola, Samsung, Sony-Ericssonand LG have their manufacturing bases in India. Presence of global majors like

Flextronics, Jabil and Elcoteq s creating potential for a quantum jump in hardwaremanufacturing in India and should have a downstream impact by stimulating demand forcomponents and assemblies.

Most of the top global semiconductor companies have set up their chip design centres inIndia. The semiconductor products that are expected to drive the revenues are:

Microprocessor driven by desktops, notebooks and telecom equipment

Analog driven by mobile phone, monitors and UPS

Memory driven by desktops, notebooks, servers and telecom infrastructure

Discrete driven by TV and audio systems, energy meters and converters, mobile

and telecom infrastructure.

While Indias presence as a base for manufacture of high end components is stillunderway, by nature of its growth in the IT/ITES industry, India has already established apresence in the R&D for components with global electronics majors such as TexasInstruments, Intel and others having their research facilities in India.

KEY PLAYERS

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Electronic Hardware sector has large number of players who operate across theirrespective value chains. A number of large MNCs operate are in the ConsumerElectronics, IT Hardware and Telecommunication Equipment segments. ElectronicComponents and Strategic Electronics segments are still relatively in the nascent stageconsist of a number of small players or large PSUs.

Exhibit 18:Key Players in the Indian Electronic Industry

Segments Key players

Consumers Electronics Videocon, LG Electronics, Blue Star,Philips, MIRC, Samsung

IT hardware HCL Infsystems, WIPRO Infotech, D-Link(India)

Telecommunication equipment Avaya Global, Bharathi Teletech, HimachalFuturistics Communications Ltd., RelianceInfraTel

Electronic components Samtel, Flextronics India Ltd., AT&S IndiaLtd., Jabil

Strategic components Bharat Electronics Ltd

Industrial electronics and others Siemens, Voltas, Tektronix, Philips

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CHAPTER 3

CONSUMER ELECTRONIC

INDUSTRY IN INDIA

CONSUMER ELECTRONICS

The convergence of information, communication and entertainment is bringing newmomentum in the consumer electronics industry in India. It has experienced rapidchanges over the last few years. Changing life styles, higher disposable income andgreater affordability is fuelling this growth. Consumer preference has shifted towards

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products and devices that come with smart technology, innovative designs and aestheticlooks. Premium products, particularly in the metros, are the growth drivers in theconsumer electronics industry.

Consumer electronics is one of the largest segments in the electronics hardware sector in

India. In this segment, Colour Television is the largest contributor. Market size for colourtelevision in 2010-11 is expected to be 16.10 million units, a growth of 5.50 per cent overthe previous\year. In value terms, the growth is much higher at 16.40 per cent. Thisgrowth is fuelled by the sale of flat panel LCD TVs which is increasing in exponentialterms. The market for LCD TV has increased from 1.5 million units in 2009-10 to 2.8million units in 2010-11. Declining prices and low penetration levels is responsible forthe growth of this segment. Conventional CRT TV segment on the other hand is stagnantat around 13.30 million units.

The DVD player market continues to decline from 6.20 million units in 2009-10 to 5.40

million units in 2010-11. Rapid growth and popularity of the DTH sector is impacting theDVD player market. The Home Theatre segment continues to grow from 0.24 millionunits in 2009-10 to 0.30 million units in 2010-11, a growth of 25 per cent. Production ofmicrowaves oven is estimated to grow by 21.6 per cent to reach 930 Crore in 2010-11 asagainst a growth of 7.9 per cent in 2009-10.

The air conditioner (AC) market has seen steady growth with a strong preference for splitAC units over window AC units. Split ACs account for about 64% of sales of ACs (invalue terms).

Growth rate in domestic production of PA System is estimated to remain flat at 10 percent in 2010-11 over a base of 410 Crore in 2009-10.During 2010-11, the totalproduction of consumer electronics is estimated to be 33,400 Crore as against 29,000Crore in 2009-10, a growth of about 15.2 per cent.

Exhibit 19: Growth in the Consumer Electronic Industry

Consumer Durables Growth

Air Conditioner 20-25%

Microwaves 25%

Colour Television 15-20%

Washing Machine 5-10%

Refrigerator 5-10%

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Black and White Television -20%

Clock 10%

Watch 10%

VCD 30%

Consumer Electronics (overall) 9%

Exhibit 20: Consumer Electronics Production Profile

Colour Television Market in India

Overview

The CTV market is estimated at 6.5 million sets per annum. According to iSuppli

corporation (Applied Market intelligence), the market of color television will grow at a

compounded annual growth rate (CAGR) of 9%.

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Major Players

The major players in the color television segment are:

Sony India

Samsung India

Videocon

Onida

Projected market growth

Exhibit 21: Projected market Growth for television industry

According to iSuppli corporation (Applied Market intelligence), color television sales

will grow at a rate of 9.6%.

Projected Sales

Exhibit 22 :Projected Market Sales for Television Industry

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Products covered

The products covered under the color television segment are:

Flat-panel

LCD plasma

Regular 21-inch CRT (cathode ray tube) or a small set

29-inch flat-screen CRT TVs

Growth Drivers

Some of the growth drivers because of which CTV market is growing fast are:

Increased awareness

Increase in disposable income

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Emergence of nuclear families

Rising availability

Declining prices

Many MNC and domestic companies are now making India as a manufacturing centre

because:

Low cost skilled labor

Tax free zones i.e. SEZs

Qualified workforce

Untapped domestic market

Excellent supply base for glass and color picture tubes

Barriers to Entry

Some of the major barriers before the companies who want to make an entry into the

market are:

Poor government spending on rural and small town electrification program

Poor distribution network

Refrigerator Market in India

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Overview

Indian refrigerator market is valued at Rs 4000 crore. Refrigerators hold only 16% of

consumer durable market that is valued at around Rs. 20,000-25,000 crore in India. Its

market is growing at the rate of 7-8% annually.

Major Players

Some of the major players in the refrigerator category are:

Whirlpool

Kelvinator

Samsung

Siemens

Projected sales for the year 2007-2008

Exhibit 23: Projected sales of refrigerator

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Focus areas in 2007

Keeping summers in mind and with the motive of "Beat the Heat," the refrigerator

companies are now focusing on high-end frost free and large capacity i.e. over 230 litres

direct cool refrigerators.

LG will focus on marketing its new model viz. Green Ion Door-Cooling

Refrigerators, which emphasizes health-related features and technologies.

Samsung is planning to launch 9 new models in both direct cool and frost free

categories.

Whirlpool is also launching new range called Mastermind in capacity of 220 litres,

250 litres and 280 litres. Whirlpool's new product target is the consumers with

requirements of not very big capacities.

Challenges faced by the companies in refrigerator segment

Despite the fact that refrigerators have immense utility to housewives and provide a

solution to avoid food wastage, the penetration level is still below 20% and its market is

growing at a very small pace. This may be because:

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People in small towns and rural areas do not consider it as a necessary product and

are unaware of its utility value.

Non-availability of power.

But the companies are leaving no stone unturned. For example, Whirlpool is involving

Ajay and Kajol Devgan as its brand ambassadors to increase the sales figure.

LG will soon be featuring Abhishek Bachchan and will run a 360 degree media plan.

Companies are investing a lot for in-depth marketing through various promotional

activities and advertising campaigns.

Washing Machine Market in India

Overview

The washing machine market is valued at Rs. 1500 crore and is growing at the rate of

22% this year (2007-08) compared to 2006-07. The fully automatic and semi-automatic

sub category is growing at the rate of 40% and 17% respectively. Washing machine sales

is cyclical in nature and its sales commences with the onset of monsoon.

Major Players

Some of the major players in the category of washing machine market are:

Whirlpool

LG Electronics India Ltd.

Videocon

Samsung

LG is the leader with 27% of market share.

Whirlpool has a market share of 17%.

Samsung has a market share of 14%.

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Products covered

Fully automatic machines

Semi-automatic machines

Front loading washer

Top loading washer

Demand Drivers in Consumer Electronics Sector

Some of the factors that are responsible for the growth in washing machine segment are:

Increase in disposable income

rapid urbanization, increase in nuclear families

increasing number of working women

growth in per capita income

greater variety of choices

increasing consumerism

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Microwave Market in India

Overview

Recently launched in India the microwave oven is among the fastest moving consumerdurable product today. Initially when the product was launched it took some time to gain

a foothold in the market but with the changing lifestyles of Indian the product startedfinding its way into more and more Indian homes. Also termed as wonder devices theintroduction of microwaves has lessened the burden of cooking specially for workingwomen in India.

Initially the concept of the microwave oven was not very well welcomed by the Indianmasses. But over the last few years there has been a tremendous growth in the sales ofmicrowave ovens in India. Out of the 25,000-crore consumer durable market in Indiamicrowave ovens are said to be the fastest growing.

The Indian market is flooded with some of the finest microwave brands both national andinternational. These brands are designed keeping in mind the requirements of Indianconsumers. Equipped with the latest user friendly technology and smart functioningfeatures the microwaves manufactured by the top brands in India are among the mostpopular consumer durable products presently.

Major Players

Top Microwave oven Brands in India include LG Electronics and Samsung India IFBand Kensta. Together they are responsible for holding a total market share of about 61per cent. LG has been the undisputed leader for almost 3 successive years with a market

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share of 41.5 per cent in 2010 followed by Samsung. IFB stands third with a marketshare of 9.8 per and Kenstar holds a market share of 9.5 per cent. Apart from these majorbrands there are a host of other electronic brand companies in India that are trying hard tomake a mark in the consumer durable market in the country. These brands collectivelyaccount for about 1.5 per cent of the total market share.

Considering the intense competition between the major players in the consumer durablesindustry the microwave from a relatively embryonic size has blossomed into a fullfledged market. The microwave oven category in India has shown growth of almost 85%in November 2010 as compared to the same period last year.

Air Conditioner Market in India

With the effects of globalization AC's or air conditioners in India are soon becoming anecessity commodity. The scorching summers in India have become unbearable and thefan no longer seems to solve the problem. With the increase in industrialization and thesubsequent growth of the middle classes luxury commodities are finding their way intoalmost every Indian home. Due to its climatic conditions India is racing up the ladder interms of air condition users. There are numerous AC brands in India that offer a sea ofchoices at absolutely affordable prices.

Due to the increasing competition in the air conditioning market in India, all the top

brands are continuously introducing new models that are equipped with the latestfeatures. The latest features that are driving the nation crazy are the fragrance emitting airconditioners, the advanced EER air conditioners and the environment friendly ones.

The Top AC Brands in India are Electrolux, Whirlpool, Samsung, LG, Voltas, Panasonic,and Godrej etc. Most of the AC's introduced by these companies are known for advancedEER's (Energy Efficiency Ratio), quick cooling, noiseless functioning and longitivity ofthe compressor and condenser.

Electrolux air conditioners top the chart as far as market reviews are concerned. They are

known for their sleek and contemporary designs, energy efficiency and high coolingcapacities

Air conditioners by Carrier are known for being environment friendly and extreme quickcooling properties. This is the most expensive AC brand in India. Samsung and LG arealso among the top AC brands in India. Counted among the most reliable and trusted airconditioning brands in India these two electronics manufacturing companies are best

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known for their good quality air conditioners at absolute competitive rates. Both thesecompanies together launched about 80 new AC models in 2009.

Domestic players like Voltas and Godrej are also not far behind. They too have made aformidable presence in the air conditioning market in India over the years.

Indian Export of Consumer Electronics

EXPORT OF CONSUMER ELECTRONIC GOODS

Export of consumer electronic goods registered a growth of 62.50 percent (42.40 percentin US$ terms) during the year 2008-09 over the year 2007-08. In value terms, export ofconsumer electronics goods increased from Rs. 1600 crore (US$ 397 million) estimatedin the year 2007-08 to Rs. 2600 crore (US$ 565 million) during the year 2008- 09.Annual average growth in export consumer electronics goods from India during the pastfive years is estimated to be 25.80 percent (25.84 percent in US$ terms).

Exhibit 24: Growth in Exports of Consumer Electronics

MAJOR ITEMS OF CONSUMER ELECTRONICS EXPORT DURING THE

YEAR

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Television sets remains Indias top item of export under Consumer Electronics sectorduring the year 2008-09 as well. Export of Television sets is estimated to Rs. 1139 crore(US$ 247 million) during 2008-09 up from Rs. 307 crore (US$ 76 million) estimated inthe year 2007-08.High growth in Export of recorded video tapes of educational natureand news/views has resulted this item to become the second top item of exports under

consumer electronics during the year 2008-09. In value terms export of recorded videotapes of educational nature and news/views during 2008-09 is estimated to be Rs.1095.65 crore (US$ 238 million). 99 percent of the recorded video tapes of educationalnature and news/views were exported to Hong Kong. The other major items of exportduring 2008-09 have been P A Systems, CD/DVD, Cassettes, Calculators and Two inones.

MAJOR DESTINATIONS OF CONSUMER ELECTRONICS EXPORTS

Singapore, Hong Kong and other South Asian countries emerged as the top destinationsfor Indias consumer electronics exports during the year 2008-09. Export to this regionregistered a growth of 217.66 percent (178 percent in US$ terms) during the year 2008-09 over the year 2007-08. In value terms export of consumer electronics to Singapore,Hong Kong and other South Asian countries increased from Rs. 308 crore (US$ 76.5million) estimated in 2007-08 to Rs. 978.38 crore (US$ 213 million). Middle Eastcountries which was the top destination for Consumer electronics exports from Indiasince the year 2000 registered a steep decline of 75.8 percent (79 percent in US$ terms)during 2008-09. Middle East countries now stand at 4th position during 2008-09. Exportto North America and EU countries also registered a high growth during the year 2008-

09. Export to North America increased from Rs. 30 crore (US$ 7.45 million) estimated in2007-08 to Rs. 956 crore (US$ 208 million) during the year 2008-09. Export to CIScountries, Far East and EU countries registered decline during the year 2008-09.

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Key Success Factors and Risk Factors for


Key Success Factors Ability to offer innovative products

Keeping abreast with technological changes

Local and efficient manufacturing to educe cost

Effective regional distribution model

Key Risk Factors

Competition

Large number of well established Indian and MNC companies

Overcapacities in China, Taiwan, Malaysia, etc.

Favorable Demand Conditions for

Growth

India has been experiencing a strong growth in the demand of consumer products anddurables in recent years, driven by consumer demographic trends. This has facilitatedgrowth in the electronics sector both directly and indirectly. Corporate Catalyst India Areport on Indian Electronics Industry Some of the key trends that have a positive impacton the sector are:

Growing consuming class (defined as people having annual income of US$ 980 (INR

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45000 or above) that has greater disposable income and propensity to spend. It has beenestimated by NCAER that this group will constitute over 80 per cent of the populationof India by 2009-10

Lifestyle changes such as greater exposure to global trends and increasing affinity for

convenience and lifestyle products

Increasing urbanisation, emergence of nuclear double income families Low penetration levels of most consumer durables. For example, in 2002, only 66 percent of middle-income households had a TV set, only 28 per cent of the urbanhouseholds possessed a refrigerator, while just a little over 15 per cent owned an aircooler. Despite a population of more than 1 billion people, only 16 million computerswere used in India in March 2005.

Increased government and private industry spending on sectors such as defence and

aerospace. The Indian aviation sector, for example, has placed orders for more than350 aircrafts with a list price of about US$ 26 billion.

In recognition of Indias domestic market potential, Samsung has selected India as oneof the top six strategic markets in the world along with the US, China, Russia, Germanyand Thailand.

Growth in demand of consumer durables such as CTVs, VCD / MP3 players and PCsdirectly benefits the sector. Also the demand for products such as automobiles, whitegoods, air-conditioners, textiles, etc, leads to growth in the electronics sector as these

products contain a significant number of electronic components. At the same time,consumer demand has boosted growth in Indias overall manufacturing sector as well,which, in turn, has a positive impact on industrial electronics.On the whole the domestic market in India is very attractive from the point of view of theelectronics sector, and current trends indicate high growth potential for the sector in thefuture.

ScopeIn terms of Purchasing Power Parity (PPP), India is the 4th largest economy in the world

and is expected to overtake Japan in the near future to become the 3rd largest. Indianconsumer goods market is expected to reach $400 billion by 2010. India has the youngestpopulation amongst the major countries. There are a lot of young people in India indifferent income categories. Nearly two- thirds of its population is below the age of 35,and nearly 50 % is below 25. There are 56million people in middle class, who areearning US$ 4,400- US$ 21,800 a year. And there are 6million rich households in India.The upper-middle and high-income households in urban areas are expected to grow to38.2 million in 2007 as against 14.6 million in 2000.Rural sector offers huge scope for54


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consumer durables industry, as it accounts for 70% of the Indian population. Rural areashave the penetration level of only 2% and 0.5% for refrigerators and washing machinesrespectively. The urban market and the rural market are growing at the annual rates of7%-10%and 25% respectively. The rural market is growing faster than the urban market.The urban market has now largely become a product replacement market. The bottom

line is that Indian market is changing rapidly and is showing unprecedented businessopportunity.

CHAPTER 4

MAJOR PLAYERS IN THE

INDIAN CONSUMERELECTRONICS MARKET

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Major Players in Consumer Electronics

Market in India

Major Domestic Player:

Videocon India (current market share-12%)

Videocon is an industrial conglomerate with interests all over the world and based inIndia. The group has 17 manufacturing sites in India and plants in China, Poland, Italyand Mexico. It is also the third largest picture tube manufacturer in the world. The groupemerges as a USD 4 billion global conglomerate continuing to set trends in every sphereof activities

Videocon's extensions

Videocon has acquired Electrolux brand in India. Also, with the acquisition of Thomson

displays by Videocon in Poland, china, and Mexico, the company is marking its

international presence.

The company operates in four key sectors:-

Consumer Electronics, Home Appliances & Compressor manufacturing: It producesconsumer products like colour televisions, washing machines, air conditioners,

refrigerators, microwave ovens and many other home appliances, selling them throughtheir sales and service network in India. It has in house compressor manufacturingtechnology for refrigerators .

Display industry and its components: By acquiring Thomson SAs colour picture-tubemanufacturing business which is spread across China, Poland, and Mexico, Videocon isable to improve the technology in existing products in slim tube, plasma, LCD, and other

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flat-panel display lines as well as create new innovative products.

Colour Picture Tube Glass: Videocon is one of the largest Colour Picture Tube (CPT)glass manufacturers in the world with a high level of experience and technical expertise

operating through Poland and India. Videocon produces a superior range of panels andfunnels to meet the demand for large-size, flat, and slim CRT display products.

Oil and Gas: An important asset for the group is its Ravva oil field with one of thelowest operating costs in the world producing 50,000 barrels of oil per day. The grouphas ambitious plans for expansion in this sector globally.

BPL LIMITED

The company was established as a single product company manufacturing high precision

hermetically sealed panel meters for defence applications.

Within a span of five years, BPL has exemplified the quest for excellence in the world ofmedical products becoming the countrys foremost in manufacturing electro-cardiographs. With the increasing nationwide infrastructure development in power andtelecommunication, BPL ventured into this field with its Power Line CommunicationsCarrier (PLCC) and continues to be a leader in this field. With the advent of televisions in

India, BPL used its manufacturing strengths and strong technical tie up with Sanyo ofJapan to launch the BPL brand televisions in the Indian market. With relentlesscommitment to quality, consistent dedication to customer satisfaction and unparalleledstandards of service, BPL is recognized as a benchmark for new age technology, superiorquality, digital concepts and personalized service that has ensured loyal customers andnationwide acclaim in the industry.

The company operates subsidiaries namely BPL Display Devices, Bharat EnergyVentures, and BPL Securities.

BPL established its image as a reliable and strong brand in the consumer durables market,a reputation that it still enjoys. In India, BPL has its footprint across the country through adistribution network comprising of over 7000 channel partners.

Products

Mobile Products

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Landline Phones Home Theatre Television Household products that includes products for home lighting, home UPS, gas

tables and cooking hubs. Medical systems, which includes healthcare products caters various segments such

as cardiology, patient monitoring systems, imaging, gynaecology, oxyenators,nebulisers and welch allyn range.

Enterprise communication products include communication solutions, digitalswitches, mini EPABX systems, DKX series of telephone systems and convexvoice processing system.

Energy communications equipments Other products include engineering design and tool room, moulding

MIRC Electronics

Mirc Electronics incorporated in 1981 is engaged in manufacturing and marketing ofLCD TV, DVD and home theatres, air conditioner, washing machine, mobile phone,microwave oven and projectors and display products. The company was founded byMr.G.L.Mirchandani and Mr.Vijay Mansukhani. Company markets its products under thebrand name ONIDA.

Companys manufacturing plant is located at Thane, Noida and Roorkee. Today thecompany has network of 33 branch offices, 208 Customer Relation Center's and 41depots spread across the country. Company produces single colour television in 12seconds and has manufacturing capacity of 1.2 million sets in a year.

The company also has sales and marketing office in Dubai. Mirc Electronics exports itsproducts to Uganda, Tanzania, Kenya and Ethiopia and SAARC countries. Companiesare marketed in big hypermarkets like Lu Lu Centres, Carrefours, Geants and Dasmans inGCC countries. MIRC Electronics shares are listed on the National Stock Exchanges andBombay Stock Exchanges.

Products

LCD TV Television DVD and Home Theatres Air Conditioning Washing Machine

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Mobile Phones Microwave Oven

Projectors and Display Product

VOLTAS Limited

Voltas, incorporated in 1954, is one of Indias leading conditioning and engineeringservice provider. The company belongs to the Tata Group. It provides a wide range ofsolutions to various industries in areas of heating, ventilation and air conditioning,refrigeration, electro-mechanical projects, textile machinery, machine tools, mining andconstruction equipment, materials handling, water management, building managementsystems, indoor air quality and chemicals. Voltas has executed projects in more than 30

countries worldwide. It has the largest customer base in industrial, commercial,institutional and the home segment.

Business

Electro-mechanical Projects and Services Under this it provides a wide range ofelectrical, mechanical, HVAC (heating, ventilation and air conditioning) andrefrigeration solutions. It also provides water management and treatment. Voltas has apresence in Oman, Qatar, Saudi Arabia, New Zealand, Ethiopia, Kenya, Libya andMauritius among others.

Engineering Products and Services In this segment it manufactures textile machinery,mining and construction equipment, machine tools and material handling products suchas forklift trucks, container handling equipment, etc.

Unitary Cooling Products It manufacturers a wide range of cooling appliances such asair conditioners, water coolers, deep freezers etc and provides commercial refrigerationsolution to multiplexes, commercial complexes and luxury liners.

Chemicals trading It is the oldest division of Voltas operating for more than 45 years.

Recognition

It is Indias no.2 brand in the air conditioner segment with a market share of 16%.

It is leader in the water cooler segment in India.

It is leader in commercial freezers and coolers in India.

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Major International Players

SAMSUNG India (current market share-37%)

Samsung India is the hub for Samsungs South West Asia Regional operations. TheSouth West Asia Regional Headquarters looks after the Samsung business in Nepal, SriLanka, Bangladesh, Maldives and Bhutan besides India. Samsung India whichcommenced its operations in India in December 1995, today enjoys a sales turnover ofover US$ 1Bn in just a decade of operations in the country.

Headquartered in New Delhi, Samsung India has a network of 19 Branch Offices locatedall over the country. The Samsung manufacturing complex housing manufacturingfacilities for Colour Televisions, Colour Monitors, Refrigerators and Washing Machinesis located at Noida, near Delhi. Samsung Made in India products like ColourTelevisions, Colour Monitors and Refrigerators are being exported to Middle East, CISand SAARC countries from its Noida manufacturing complex.

Samsung India currently employs over 1600 employees, with around 18% of its

employees working in Research & Development.

Whirlpool of India Ltd.

Whirlpool, right from its inception in 1911 as first commercial manufacturer ofmotorized washers to the current market position of being world's number onemanufacturer and marketer of major home appliances, has always set industry milestonesand benchmarks. The parent company is headquartered at Benton Harbor, Michigan,

USA with a global presence in over 170 countries and manufacturing operation in 13countries with 11 major brand names such as Whirlpool, KitchenAid, Roper, Estate,Bauknecht, Laden and Ignis.

Today, Whirlpool is the most recognized brand in home appliances in India and holds amarket share of over 25%.

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The company boasts of resources and capabilities beyond achievable feat of any other inthe industry. Whirlpool initiated its international expansion in 1958 by entering Brazil.However, it emerged as truly global leader in the1980s. This encouraging trend broughtthe company to India in the late 1980s. It forayed into the market under a joint venturewith TVS group and established the first Whirlpool manufacturing facility in

Pondicherry.

Soon Whirlpool acquired Kelvinator India Limited in 1995 and marked an entry intoIndian refrigerator market as well. The same year also saw acquisition of major share inTVS joint venture and later in 1996, Kelvinator and TVS acquisitions were merged tocreate Indian home appliance leader of the future, Whirlpool India. This expanded thecompany's portfolio in the Indian subcontinent to washing machines, refrigerator,microwave ovens and air conditioners.

Product range of the company includes:

Refrigerator Washing Machine Air Conditioner Microwave 100% Dryers Purafresh

LG Electronics India Pvt Ltd(current market share-23%)

LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, SouthKorea was established in January 1997 in India. It is one of the most formidable brandsin consumer electronics, home appliances, IT hardware and mobile communicationsspace. In India for a decade, LG has earned a premium brand positioning and is theacknowledged trendsetter for the industry.

LGEIL has achieved a turnover of Rs 8250 crore in 2006. LGEIL's manufacturing unit atGreater Noida is one of the most eco-friendly units among all LG manufacturing plantsin the world. The second Greenfield facility is located at Ranjangaon, Pune has thecapacity to manufacture GSM Phones, Colour Televisions, Microwave Ovens,refrigerators and Optical Disc Drives. This is India's first mobile phone manufacturingunit and also Asia's largest Optical Disc Drive manufacturing plant.

In India for a decade now, it is the market leader in comsumer durables, and recognisedas a leading technology innovator in the information technology and mobile

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communications business. It is the acknowledged trendsetter for the consumer durableindustry in India with the fastest ever nationwide reach, latest global technology andproduct innovation.

HITACHI Home & Life Solutions (India) Ltd

Hitachi Home and Life Solutions (India), popularly known as Hitachi, is engaged inmanufacturing a range of electronic home solutions.

Hitachi Home and Life Solutions (India), incorporated in 1984, is a subsidiary of HitachiHome & Life Solutions Inc, Japan. The company is among the leading air-conditioningcompanies in India, which exports to SAARC, Middle East and few more countriesglobally.

Headquartered in Ahmedabad (Gujarat), the company's manufacturing unit are located atKadi (Gujarat) and Jammu. The company has installed capacity of 250,000 units a year.

Hitachi Home & Life has a marketing network of 18 branches, 250 sales and servicedealers, more than 800 showroom dealers and 350 service points.

Products

Air-Conditioning- The company produces range of products such as window ACs, split

AC, tower and packaged air conditioners

Hitachi manufactures 2- and 3-door refrigerators. It also manufactures fully automaticmachines.

Sony India (current market share-21-22%)

Sony Corporation, Japan, established its India operations in November 1994.In India,

Sony has itsdistribution network comprising of over 7000 channel partners, 215 SonyWorld and Sony Exclusiveoutlets and 21 direct branch locations. The company also has

presence across the country with 21company owned and 172 authorized service centres.

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Haier Appliances (India) Private Limited

Haier Appliances (India) Pvt Ltd ((Haier Appliances India) is a wholly-owned subsidiary

of Haier Group. The Haier Group was incorporated in 1984 in China. The group

manufactures home appliances in over 15,100 different specifications under 96

categories.

Haier Appliances India started its operations in India in Dec 2003. In Aug 2004 thecompany made an all-India promotional launch of over 55 products across six differentproduct categories which comprised of refrigerators, colour television/DVDs, washingmachines, microwave ovens and dishwashers. The company has recently launched itsbrand of mobile phones in India. Haier Appliances India has got its presence in all themajor cities of the country. The company has a strong network that comprises of 18

branch offices, 25 warehouses and over 4,000 retail outlets. The company has got adealer network of more than 1600 dealers all over the country.

In the year 2007, Haier Appliances India entered in to a JV with Sanyo of Japan in orderto expand its business in Asia by selling its refrigerators under the Sanyo brand. Duringthe same year, the company also acquired Anchor Daewoos Appliance business whichincluded a refrigerator manufacturing unit at Ranjangaon in Pune.

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CHAPTER 5

SWOT ANALYSIS ON

CONSUMER ELECTRONIC

INDUSTRY IN INDIA

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SWOT ANALYSIS

STRENGTHS:

1. Presence of established distribution networks in both urban and rural areas

2. Presence of well-known brands: A large no. of well known brands likeSamsung,LG,Sony,Hitachi,Videocon etc, are present in the Indian market. Thus makingthe market highly potential for customers.In recognition of Indias domestic market

potential, Samsung has selected India as one of the top six strategic markets in the worldalong with the US, China, Russia, Germany and Thailand.

3. In recent years, organized sector has increased its share in the market Vis a Vis

the unorganized sector.

4.Abundant Availability of Man Power: India produces over 500 PhDs, 200,000engineers, 300,000 non-engineering postgraduates and 2,100,000 other graduates eachyear.Indias capabilities in IT and engineering make it an attractive location for sourcingengineering services such as Research & Development (R&D) and design.

5.Competitive Labour Costs: Indias cost of skilled labour is among the lowest in theworld.For example, average labour rate per employee in the electronics sector is about$3,000 per year. Labour cost as a percentage of value added is only 21 per cent in Indiaas compared to 23 per cent in China and 30 per cent in Taiwan. Taking advantage of thismany MNCs have set up manufacturing bases in India for domestic consumption as wellas exports

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WEAKNESSES

1.Demand is seasonal and is high during festive season

2. Low purchasing power of consumers

3. Lack of clear-cut government policy for the industry.

6. Very little expenditure in Research and Development area: The Indian companiesdo not spend more on the R&D area, thus making the market obsolete.

5. Heavy Taxation: Heavy taxation in the country is one of the hurdles for the players.

At its present structure the total tax incidence in India even now stands at around 25-30per cent, whereas the corresponding tariffs in other Asian countries are between 7 and 17

per cent.

6. Poor Infrastructure: Poor infrastructure is another reason that seems to have held

back the industry. Regular power supply is imperative for any consumer electronics

product. But that remains a major hiccup in India

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OPPORTUNITIES

1. Penetration Level: In India, the penetration level of white goods is lower as compared

to other developing countries.For example, in 2002, only 66 percent of middle-incomehouseholds had a TV set, only 28 per cent of the urban households possessed arefrigerator, while just a little over 15 per cent owned an air cooler.

2. Rise in disposable income: The demand for consumer electronics has been rising withthe increase in disposable income coupled with more and more consumers falling underthe double income families. The growing Indian middle class is an attraction forcompanies who are out there to woo them.

3. Availability of newer variants of a product: Consumers are spoilt for choice when it

comes tochoosing products. Newer variants of a product will help a company in gettingthe attention ofconsumers who look for innovation in products.

4. Potential markets remaining yet untapped: A large segment of the domestic market,

mostly therural market is yet to be tapped. Tapping this yet untapped and unorganised

market is a majoropportunity for the Indian consumer durables sector.

5. Availability of financing schemes: Availability of credit and the structure of the loandetermine theaffordability of the product. Sale of a particular product is determined bythe cost of credit as muchas the flexibility of the scheme.

6. Rise in the share of organized retail: Rise in organized retail will set the growth paceof the Indianconsumer durables industry. According to a working paper released by theIndian Council form Research on International Economic Relations (ICRIER), organizedretail which constituted a mere four percent of the retail sector in FY07 is likely to growat 45-50% per annum and quadruple its share in the total retail pie 16% by 2011-2012.The share will grow with bigger players entering the market.

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1. Threat from new entrants, especially global companies: The domestic consumer

durables sectorfaces threat from newer companies, especially from global ones who have

technologically advancedproducts to offer.

2. Rivalry and competition: Presence of a large number of players in the domestic

consumer durablesindustry leads to competition and rivalry among companies. Threat

from rivalry and competitionposes a threat to domestic companies.

3. Threat from substitute products/services: The domestic consumer durables industry

is plagued bythreats from substitute products. Easy accessibility to theatres/multiplexes,

especially in urban areas has turned off the viewership from TV to a large extent. With

the advent of a horde of FM radio stations, radio sets have now substituted TVs. Cheap

imports from Singapore, China and other Asian countries

4. Customer power with respect to availability of choice: The availability of a wide

product line onaccount of most products being homogeneous, poses a threat for

companies operating in the consumer durables sector. Customers have the choice of both

domestically produced and imported goods, with similar features.

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CHAPTER 6SURVEY

SURVEY

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Survey Method:

In order to find out the market share of different players in the market, I

have employed structured survey method using questionnaires.

A questionnaire consists of a set of questions presented to a respondentfor answers. The respondents read the questions, interpret what isexpected and then write down the answers themselves. I will use a close-ended questionnaire.

Closed ended questions include all possible answers/prewritten

response categories, and respondents are asked to choose among them.-e.g. multiple choice questions, scale questions.

Purpose of the Questionnaire: To know the market share of differentplayers in the Indian consumer electronic industry.

Random Sample: The survey was conducted over 50 individuals.

The questionnaire consisted of 4 questions .The answers to all thequestions were suggested for consistency, and they could be ticked inboxes (multiple choice format).Each question had 4 different choices.The 4 companies selected for the survey were: Videocon, Samsung, LGand Hitachi.

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CHAPTER 7

ANALYSIS AND FINDINGS

ANALYSIS AND FINDINGS

Exhibit 25: Most Preferred Brand in Consumer Electronics

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Exhibit 26: Most Preferred Brand in Refrigerator market

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Exhibit 27: Most Preferred Brand in Television Market

Exhibit 28: Most Preferred Band in Washing Machine

Market

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Most Preferred Brand in Microwave Market

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Most Preferred Brand in Air Conditioner Market

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Most Preferred Brand in Mobile Market

Most Preferred Brand in Computer/Laptop Market

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REFERENCES

Annual Report 2010-2011 Department of Information Technology,India

http://www.mit.gov.in/sites/upload_files/dit/files/annualreport2010-11.pdf

NSDC Report for Electronic and IT Hardware Sectorhttp://www.mit.gov.in/sites/upload_files/dit/files/Electronics_IT_Hard

ware_NSDC_Report_17311.pdf

Electronic Industry in India

www.asa.in/pdf/surveys_reports/electronics-industry.pdf

Electronic Hardware and Component Industry in India-An Overview

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https://www.xing.com/.../electronics-hardware-and-components-industry-in-india-an-overview-13560464/

Consumer durable industry in India

http://www.scribd.com/doc/49620972/Consumer-Durable-Industry-in-India

Consumer Electronics in India - An Analysis

http://www.slideshare.net/ghaayathri/consumer-electronics-in-india-an-analysis

http://info.shine.com/company/Videocon-Appliances-Limited/904.aspx

http://info.shine.com/company/Voltas-Limited/903.aspx

http://info.shine.com/company/Whirlpool-Of-India-Ltd/2028.aspx

http://info.shine.com/company/Hitachi-Home-Life-Solutions-India-Ltd/3344.aspx

indian electronic industry2

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