Case studyon

GRAMOPHONE CO. OF INDIA LTD.

Submitted by:BHUMI RAULJI SHEFALI GOHIL

The company was established in 1901Gramco began its manufacturing

operations in 1907 and was the only gramophone records manufacturing company in the country upto 1970.

In 1992 the main product of the company was music cassettes and CDs.

The famous dog and gramophone logo ”his mister’s voice” has become the best brand symbol in the country.

Ownership And ManagementGramco was the first overseas branch

of electric and musical industries ltd., London.

In 1965 an Indian company, in name of gramophone co. of India ltd was formed.

Mr bhaskar menon was appointed as the managing director.

During Mr menon’s tenure, sales increased from 2.47 crore to 4.33 crore in 1970.

From 1970 to 1983, Mr. anil sud and ex-managing director of Indian motion picture export promotion council was the managing director of gramco.

In 1985, RPG enterprises took over the management of the company with an understanding of participating in equity in future.

COMPANY OPERATIONSGramophone Records

The technologies of music recording, lacquer disc transfer, mother shell and stamper manufacturing and record pressing were available from EMI, UK.

Major raw materials like PVC record compound, S-nickel, lacquer and mastering tape were imported.

A new factory was setup in 1970 at Bombay.

Bombay has locational advantage mainly because of its proximity to the movie world,singres and producers.

Consumer electronic products

With the intention of providing music hardware for common man,who in turn would buy records, this division was established in 1960 to manufacture inexpensive record players.

Grmco had to compete with the small scale industry which had clear advantages with lower labor and overhead costs and excise duty.

Gramco decided to expand the unit with more and more manpower to produce more and more inexpensive products.

TCS was hired to suggest ways and means of making the division profitable.

Gramco’s own variety of record playing equipments, mostly cheaper products, became obsolete compared to those of its competitors as Philips, sonodyne who concentrated on high-power sophisticated products.

Music cassette divisionThis plant was set up in late 70s with licenced

capacity of 1.2 million per year and an export obligation of 75%.

Prices of cassettes were deliberately kept higher thereby discouraging consumers from going in for cassettes without taking into consideration.

Cassettes manufacturing involved procuring various components such as plastic cassette covers,liner,shield,screw,etc. from outside sources either in assembled form or individually and getting the magnetic taps recorded by multiple cassettes-duplicating systems from master tape.

Duplicating system were available for Rs. 50000 to Rs 50 lakh per system.

Company performance till 1983In 1983 the cost of a cassette was Rs

25/-as against that of record being Rs. 40. The cost of a cassette player was Rs 600. while that of a record player was Rs. 1000.

The strategy adopted by the management was to reduce the fixed cost. Consequently a voluntary retirement scheme was announced.

COMPETITION AND CHANGING MARKETcassette Market: the t-series Revolution

In the early 80s Gulshan Kumar, formerly a fruit-juice-stall owner from Delhi, launched the T-series brand and got into the cassette version.

STRATEGIC PLANNING

Increased operation: Asset utilisation programme It was proposed manufacture of

whole new line of products that really enthused the new group.

Main objective for the manufacture of he new lines was to find ways and means to generate revenues by the surplus staff.

Enhancement of capacity and productivity increaseCassettes production was further

increased to 30 million per year.Production during 1990-91 was

182 lakh as compared to 47 lakh in 1987-88

Sales and MarketingOn paper, there were more than 1500

dealers but, in fact, only 237 were operative, the rest had stopped doing business with Gramco owing to many disputes, largely of long overdue outstanding.

Out of these 237, about 25 were wholesalers catering to another 1000 odd outlets of varying size.

Consequently, HMV was hardpressed to sell more than 250,000 cassettes a month.

Market visits and probing of wholesalers who pushed pirated cassettes, cross analysis of tape imports and sales of indigenous tape manufacturers and an assessment of the business injection moulders who dealt in cassettes components indicated a market of on a conservating basis, 4 Lakh a day, i.e. 120 lakh a month against HMV’s business of 2.5 lakh a month.

The market was reportedly growing @ 20-25% per annum.

To the music customer HMV was synonymous to music but the reputation of HMV product quality, especially cassettes quality had suffered.

To new dealers, the HMV image was that of a bureaucratic company and, therefore, direct dealing was to be avoid.

To the trade, the HMV dealership was prestigious but the perception of regular supplies was negative.

To producers and artists, HMV still was only respectable label, but there was a hesitation to sing for label because of reputation of non-payment of royalty dues.

Gramco began advance payment against royalty acquiring film soundtracks.

Gramco went into an alliance with McDowell, the Banglore based liquor company, to produce and market two sets of six cassettes each.

Gramco received funds, both debt and equity, from the RPG group companies, IRBI, Banks and Debenture holders to the tune of Rs. 15.56 crore to finance the expansion, to meet outstanding liabilities and to finance the film soundtrack acqusition.

Organization and systems

Board meeting were held once in three months.

Top level mgmt met every month to decide various policy matters and to fix functional targets.

For implementation of various targets-Sales, marketing and A&R (artiste and

repertoire) met quarterly to decide the mktg strategies.

Production and planning met weekly.

production and purchase met daily to review the progress and re-planning.

ISO-9000 committee for design and implementation of quality system.

Regular interaction between workmen’s representatives and management.

Human Resource DevelopmentPut more efforts on human resource

developmentTraining requirement were assessed

for all staff members.In-house and external programmes.Performance appraisal- once a yearGive recommendation regarding

future growth potential, job rotation, strength, weaknesses, reward and punishment and training needs.

Introduced an incentive plan for the sales personnel based on actual sales.

Developed a culture of verbal communication rather than just relying on reports and papers.

GRAMCO- FUTURE CONCERNS

Mission according to- Mr. Chanda

To preserve, protect and propagate the rich musical heritage of our country and provide a platform for global interface.

To help create high quality music and make it available on the state-of-the-art but durable carriers that will give listening pleasure today and to generations to come.

To once again lead the industry by setting and maintaining standards that others will be hard pressed to attain.