INDIAN TELEVISION INDUSTRY

Growth of consumer electronics

1950s Radios Late 1960s B&W TV Transmission 1982 Colour TV Transmission 1992 Liberalization Process initiated 1993-94 Dismantling of controls such as licences, use of foreign Brand Names etc. 1994-95 Entry of MNCs . Panasonic, Sony, LG, Samsung etc. Lowering of Import duties. Cable TV Started 1995- Till Date Entry of Many MNCs & Rapid Growth 2001 Non Tariff Barriers on Imports removed. 2004 Free Trade Agreement with Thailand implemented, resulting in reduction of import duties on Colour Television sets, Colour Picture Tubes, Refrigerators and Air Conditioners, thus more competition.

Union budget 2012-13: Disappointed consumer durables companies like Videocon, Samsung to hike price
PTI Mar 16, 2012, 07.32PM IST

Tags: Samsung| Rupee depreciation| LG India| infrastructure| consumer sentiment| consumer durables| budget news| budget 2012|

Anirudh Dhoot|

NEW DELHI: Consumer durables makers such as Videocon, Samsung and LG today expressed disappointment over the lack of incentives in the Budget to counter sluggish demand in the industry. The firms also said the excise duty hike by two per cent will be passed on to consumers and it may hurt sales further. "In this Budget, we were expecting some relief from the government in terms of taxation, infrastructure set up, reduce customs duty, encourage domestic manufacturing especially set top boxes etc. However, not all of it has happened," Consumer Electronics and Appliances Manufacturers Association (CEAMA) PresidentAnirudh Dhoot said in a statement.
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Budget at ET: Budget 2012 | Union Budget | Live Union Budget Blog | Railway Budget | Budget News |Economic Survey of India Dhoot, who is also the Director of Videocon, said the manufacturers had hiked the prices by 5-10 per cent as the last quarter of 2011 was not favorable due to factors like inflation, fuel prices and rupee depreciationagainst dollar. "The increase of excise duty and service tax from 10 per cent to 12 per cent will straight away affect the end consumer, right from lower middle class to upper class of the society," he added. He, however, said removal of customs duty on LCD and LED panels and mobile phones parts, and the five year extension for weighted deduction of 200 per cent on R&D expenditure for in-house facilities are welcoming decisions. "In the Indian consumer durables industry, majority of the products are still being manufactured in India. So the growth of durables industry would be a challenge," Dhoot said. Consumer durables major Samsung India said it may hike the prices of its products due to increase in excise duty. "The rise in excise duty may lead to an increase in prices of consumer electronics products," Samsung India Vice President (Home Appliances) Mahesh Krishnan said. He said the benefits announced for key sectors like infrastructure, agriculture and education are bound to improve the overall economic scenario. "However, the Budget does not bring any relief to the consumer electronics industry, which has been reeling under the impact of rising input costs and rupee depreciation in recent times," Krishnan said. Another consumer durable major LG India said rolling back of financial stimulus package will affect consumer sentiment even as the industry is still struggling with steep dollar exchange rate and input cost increases over the last one year.

The Consumer Durables industry consists of durable goods and appliances for domestic use such as televisions, refrigerators, air conditioners and washing machines. Instruments such as kitchen appliances (microwave ovens, grinders etc) are also included in this category. This industry includes all those goods which are durable i.e. products whose life expectancy is at least 3 years. These products are hard goods that cannot be used up at once. According to recent industry reports, the steadily growing market for consumer durables is estimated at Rs. 300 billion. Segmentation of the Consumer Durables Industry: The consumer durables industry can be broadly classified into 2 segments: Consumer Electronics and Consumer Appliances. Consumer Appliances can be further categorized into Brown Goods and White Goods. The key product lines under each segment are as follows:

Titan, the market leader in watches and branded jewelry, has clocked the highest Net Sales CAGR of 34% over the last 6 years. It has thecompetitive advantage of a strong brand, which has helped it become the market leader. Using the right segmentation & smart branding strategies, Titan has successfully captured the watch and jewelry market. It has also managed to maintain a good Net Profit Margin of 6% TTK Prestige, the market leader in pressure cookers and kitchen solutions, has registered the highest CAGR of 74% in Net Profit over a 6-year period.

1) Rise in Disposable Income:

The demand for consumer durables has been rising with the increase in disposable income coupled with more and more consumers falling under the double income families. Also, the growing Indian middle-class plays a major role in increasing the demand. This, along with a fall in the prices of durable goods mainly due to the advancement of technology, easy import of components has led to an increase in the consumption expenditure on durable goods. 2) Easy-availability of consumer financing: Apart from steady growth in income of consumers, consumer financing has become a major driver in the consumer durables industry. In the case of more expensive consumer goods, such as refrigerators, washing machines, color televisions and personal computers, retailers are marketing their goods more aggressively by providing easy financing options to the consumers by partnering with banks. The easy-availability of consumer financing is beneficial mainly for the lower and middle income group, especially when the cost of capital and flexibility of the scheme is in their favor. 3) Existing Potential in Rural Markets: Growth is coming in a big way from the smaller towns and rural markets and is expected to be the next growth opportunity for the consumer durables market. In the last year ~30-35% of the total sales of consumer durables was from the rural market. This is expected to grow by 40-45% in the near future. The rural durables market has been growing by ~30% annually, mainly due to the growing affordability of products as well as the general buoyancy in the economy. Products like mobile phones, televisions and music systems are the ones which have witnessed high growth among the rural market. To further cater to this market many manufacturers have started using local languages while offering products to the rural crowd.

4) Increasing share of Organised Retail: Since the last couple of years there has been an increasing shift towards organized retail (brands) from the unorganized (unbranded) products. With rising income and purchasing power, and the younger generation preferring branded products, the share of organized shopping is increasing. Shopping in malls is considered more of an experience these days. According to estimates, organized retail which constituted ~4% of the total buying till 2010, is expected to grow to over 10% by 2013. 5) Entertainment and Media to boost growth: According to a recent report by KPMG, the Indian Media & Entertainment (M&E) industry registered a growth of 11% over 2009 and touched Rs. 652 bn and is expected to achieve a 13% growth in

2011. Overall the industry is expected to register a CAGR of 14% to touch Rs.1275 bn by 2015. Out of this, the television industry is expected to achieve a 16% CAGR and is expected to account for almost half of the Indian M&E industry revenues. The television segment of the consumer durables industry is seeing high growth coming from high-end flat panel TV, LCD TVs and Plasma TVs. All of these were expected to register a 100%+ growth in the last year. Hence, the growing importance of entertainment and media on our lifestyles is expected to boost the demand for products like Plasma TVs , LCDs, DVD Players. 6) Consumer Preferences: Consumers purchase goods by looking at the brand, pricing, and discount schemes available at the time of buying. So, for the consumer durables industry following are important growth drivers:
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Availability of new and innovative products A company that upgrades its technology and comes out with new and innovative products catches the attention of consumers. Especially in the consumer electronics segment, manufacturers have to make sure they are updated with the latest technology that has entered the market. For the higher income groups thebrand, technology and the product features play an important role Pricing of the products - For the lower and middle income groups, price is the deciding factor especially in a price-sensitive industry like consumer durables. Festive discount schemes The sales of many consumer durables goods are driven by festive discounts. For example people consider it auspicious to purchase goods like LCDs, Televisions, Washing Machines, etc during festivals like Diwali, Gudi Padwa, etc. 1) Cheap imports from Asian Countries : The cheap imports of consumer durable products from countries like China, Singapore etc is a major concern. 2) Increasing competition: Presence of a large number of players in each segment leads to high rivalry. Also, the unorganized market is yet very strong in the case of many consumer durable goods. The pie of the unorganized sector is relatively large in most of the segments, hence increasing the competition. 3) Fluctuating raw material prices: Rising input costs of raw materials viz. copper, steel, aluminum and plastic - the major raw materials required for this industry will severely put pressures on margins. 4) Unfavorable Duty Structure: Top players in the consumer durables industry have been demanding a more favorable import duty on durable components imported by them. Take the case of LCDs which is the fastest growing segment right now - the industry has been demanding a reduction in the import duty. Contrary to this is the case of set top boxes, where 80% of the set top boxes are imported. The industry has been recommending that the custom duty on STB should be increased by 5% to 10% in order to boost domestic manufacturing. 5) Continuously changing technology; a challenge:

The consumer durables sector faces the challenge of a continuous change in technology and the inability to cope with it. High-end consumers prefer changing their goods along with the up-gradation of technology and manufacturers have to make sure they cater to this requirement. The Indian market is fast moving towards high-end products and the importance of media and entertainment is growing among the young market. The consumer durables industry needs to constantly focus on innovation and needs to come out with product variations across categories to meet the different expectations of a varied class of customers. With easy availability of finance, fall in prices due to increased competition, growth of media, growth in consumer base of rural sector, the consumer durables industry is growing at a fast pace. Given these factors, a good growth is projected in the future, too. With the Indian Economy expected to grow at ~7 8%, the existing potential in the durables market augurs well for the consumer durables industry. Hence, we can say that the consumer durables sector is expected to grow with a good growth rate and have a bright future. It is very important that while investing in a company, an investor selects a sector, where the longterm future prospects are bright. We have seen that in the long run the consumer durables sector is expected to have good growth. Also, it is equally important that the company has an excellent financial track record( i.e. Green 10 Year X-Ray) and its long-term future prospects are Green (Very Good). *The 10 YEAR X-RAY facilitates analysis of the financial performance of the company considering the five most important parameters. A 10 Year period will normally encompass an entire business cycle. Analysing the performance over this time frame is essential to understand how a company has fared during the good as well as bad times. The five most important parameters that one needs to look at are Net Sales Growth Rate, EPS Growth Rate, Book Value Per Share (BVPS) Growth Rate, Return on Invested Capital (ROIC) and Debt to Net Profit Ratio. Now, lets have a look at what the MoneyWorks4me assessment for a few consumer durable companies: At MoneyWorks4me we have assigned color codes to the 10 Year X-Ray and Future Prospects for the companies, where Green (Very Good), Orange (Somewhat Good) and Red (Not Good).

In the above table, we have given you a list of the major consumer durable companies along with their MoneyWorks4me 10 YEAR X-RAY and Long-Term Future Prospects Assessment. To view the

10 Year X-Ray of the above companies and other consumer durable companies, become a member of MoneyWorks4me.com. Titan Industries is the leading manufacturer of watches (60%+ market share in the organized Indian market). It is also the market leader in branded jewellery with a 40% market share. The only close competition it has is in the jewellery segment is Gitanjali Gems, a company that hosts multiple jewellery brands like Nakshatra, Gili, DDamas. Blue Star is Indias largest central air-conditioning company and a leader in commercial refrigeration, fulfilling the requirements of a large number of corporate and commercial customers. It faces competition from companies like Lloyd Electric, Voltas etc. TTK Prestige is the market leader in pressure cookers and the largest kitchen appliance company, providing total kitchen solutions; it is predominantly present in Southern India. Its closest competitor is Hawkins, which mainly caters to North India. However, Hawkins is much smaller, with only half the revenues of TTK. TTK also now offers complete kitchen solutions with a product range comprising non-stick cookware, gas stoves, kettles, sandwich toasters, etc. It is also into modular kitchens. TTK is the first to produce a microwave pressure cooker in India and is the worlds first CE marked microwave pressure cooker. Thus, TTK Prestige has expanded its product line well with the changing preferences of consumers, an area where Hawkins is lagging behind. While investing, one must always invest in a company that operates in an industry where the longterm is bright, and the companys 10 YEAR X-RAY and long-term future prospects are Green. As seen above there are a few companies that are worth investing in. But, you need to invest in these companies at the right price (i.e. when the market offers an attractive discount). To find out the right price to invest in these companies, become a member of MoneyWorks4me.com Disclaimer: This publication has been prepared solely for information purpose and does not constitute a solicitation to any person to buy or sell a security. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations or needs of an individual client or a corporate/s or any entity/ies. The person should use his/her own judgment while taking investment decisions.

Overview Discover the latest market trends and uncover sources of future market growth for the Televisions and Projectors industry in India with research from Euromonitor's team of in-country analysts. Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections. If you're in the Televisions and Projectors industry in India, our research will save you time and money while empowering you to make informed, profitable decisions. The Televisions and Projectors in India market research report includes:

Analysis of key supply-side and demand trends Detailed segmentation of international and local products Historic volumes and values, company and brand market shares Five year forecasts of market trends and market growth Robust and transparent market research methodology, conducted in-country

Our market research reports answer questions such as:

What is the market size of Televisions and Projectors in India? What are the major brands in India? What percentage of LCD TVs sold in the last year were full HD? How many Plasma TVs were sold in the last year? What are the fastest growing distribution formats for televisions and projectors?

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This industry report originates from Passport, our Consumer Electronics market research database. SAMPLE ANALYSIS TRENDS

The launch of products with new technology like LED panels and full HD and 3D screens created excitement in televisions and projectors and attracted a lot of urban customers. Within one year of their launch, LED TVs were able to capture 10% of LCD TV sales. 2010 also saw HD and 3D TVs being promoted in a big way. Following the launch of 3D and HD TVs, most DTH service providers also introduced HD and 3D set-top boxes to the market and a few broadcasting channels also introduced some HD content through separate HD channels. This triggered an increase of 69% in LCD TV volume sales and a 93% increase in value sales.

COMPETITIVE LANDSCAPE

In analogue TVs, LG and Samsung were the leading brands in 2010, each with a volume share of around 23%. In LCD TVs, Samsung led with a 34% volume share. In other digital TVs LG led sales with a 28% share. LG and Samsung are the leaders because of their strong distribution and aftersales service network.

PROSPECTS

The introduction of advanced technology will be the driving factor for future volume and value sales. Some companies are working towards manufacturing 3D enabled TVs that will not require special glasses to view 3D content. This will generate a great interest in 3D TVs as the entire family would then be able to easily view 3D content together without buying separate glasses for everyone. OLED TVs and ultra HD TVs are also expected to hit the market within the forecast period and they will also generate great interest as many customers now like to keep up to date with the latest technology.