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Videocon continues its globalisation drive - Views on News from Equitymaster
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  • Sep 20, 1999

    Videocon continues its globalisation drive

    Indian white goods major Videocon, plans to set up a US$ 30 m manufacturing plant in Bahrain to cater to the Middle East markets.

    The Videocon group manufactures and markets a wide range of consumer durables, which include refrigerators, washing machines, air conditioners, and other household appliances. The company has tied up with Matsushita Electronics, Japan for producing and marketing white goods. Videocon is the market leader in the washing machines segment with a 58% market share and commands 20% market share in the refrigerators segment. It is also a leading producer of television sets, audio and video systems.

    Videocon will be a minority 49% partner in the project with United Commercial Agencies, Bahrain holding the majority stake. The new entity will enter different product categories in three phases. The first US$ 10 m will be invested to manufacture colour televisions (CTVs), the next US$ 14 m to manufacture refrigerators and the remaining US$ 6 m to manufacture washing machines in the last phase. The first batch of CTVs will roll out by October 2000.

    The project is part of the group's on going globalisation drive. Videocon has already announced plans to market a 14 inch CTV in Europe. The company is in talks with some European companies that can provide an assembly line to manufacture the 14-inch CTVs. The group may opt for Italy, as it already owns an Italian compressor manufacturing company known as Necci.

    In the long term, the group is targeting to corner at least 3% in global markets in each product category it operates in and hopes to become a Rs 200 bn global consumer durables giant by 2007.

    If Videocon does manage to get some recognition in the overseas market, it will be able to spread its risks globally, meaning it will not solely depend on India to put up a good performance. On the flip side, Videocon might find going tough as overseas markets is very competitive and the group will have to operate on thin margins.



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