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Samsung The Korean Pride - Views on News from Equitymaster
 
 
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  • Jul 1, 2000

    Samsung The Korean Pride

    Guess what? The domestic consumer durable companies are facing a run for their money from this Korean multinational giant. Samsung India Electronics Limited (SIEL) has posted a 38% growth in turnover for the six months ended June 2000 compared to the domestic companies who have shown a growth in sales of just 12%-15%.

    The turnover for the six months has increased from Rs 2,920 m to Rs 5,500 m, a growth rate of 88%, compared to the corresponding period for the previous year. This is factored by the impressive growth in the color television and the home appliances division. The home appliances segment contributed 42% of the turnover.

    While other companies have been struggling to generate top line growth, Samsung has been widening its distribution network, enhancing product quality thus gaining considerable market share in all segments like television, washing machine, air conditioners and microwave ovens year on year. For example, in the air conditioners segment, the company currently has 10% market share barely after one year of launch and has targeted 15% by FY01.

    The company proposes to export 60,000 CTV's this year, which would be scaled up to 200,000 next year. With a strong research and development center the company has proposed to introduce new models aiming for a turnover target of Rs 14 bn for FY01.

    But the only concern would be the depreciating rupee that will make imports costlier since these companies rely on imports for their colour picture tubes. Moreover the recent 10% increase in picture tubes prices means that the prices of CTV have to be increased, as further absorption in production cost is not viable. But, with the launch of new models like Metallica and adequate focus on research and development for new products, the company is set to ride on the consumer-spending boom.

     

     

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