Videocon International's sales from FY1995-FY2000 have increased by 50% to Rs30bn

while earnings have inched up only by 12.5% to Rs20.70. This is because the company has a
problem with its mounting interest burden. The company's net profit for FY2000 has shown an
increase of 9.9% to Rs1.5bn while the company's sales for FY2000 increased by 12.5% to
Rs30bn.

Akai showed a marked rise in its share in 1997-98, thanks to its radical marketing strategy of
pricing CTVs below the psychological barrier of Rs10,000. This re-ignited latent demand
among B&W TV set owners. Besides doubling sales, this strategy also halved the previous
replacement cycle from 12 to 6 years. However, the story was different in FY1999. It lost out
heavily when its tie-up with Baron ended. The company has a market share of just 2%.
Currently, the Akai brand is with Videocon. . Akai, for eg, sold its CTVs at an unbelievable
price of Rs10,000 to lure price-sensitive consumers. Replacement Demand vis-à-vis Entry
Of AkaiIndians have a mindset which prevents them from throwing away old items, especially
items like durables, which cost a big amount. However, if an individual can replace it for a
new one, he/she will readily do so, for eg, items like garments are exchanged for utensils.
Akai's huge success story was scripted largely because it tapped the latent demand for
replacing existing TVs in the early 1990s. With the entry of satellite TV in the early 1990s,
most TV sets in India had turned obsolete. They did not have the S-band facility to receive the
large number of channels. What Akai did was to push the replacement cycle forward by taking
back old TV sets. Their exchange schemes broke the inertia and the sense of guilt that exists
while disposing of an old TV set that works. The old TV sets were supplied to the rural market
at prices ranging from Rs2,000 to 4,000. In time, they formed the new replacement market.

Akai, for eg, sold its CTVs at an unbelievable price of Rs10,000 to lure price-sensitive
consumers. This strategy paid off for some time in the urban areas.

Videocon manufactures 38% of CTVs sold in India. For the period FY2000, the company
enjoyed a 19% market share (including share of brands marketed by Videocon). The
company's strength is a strong brand, which has enabled the group to withstand strong
competition from multinational companies. However, with the Korean multinationals on a roll,
the company will not be able to withstand the pressure if it does not invest innovative ideas
and the latest technology in its products. Videocon also manufactures glass shells, which is
an important input for making CPTs. With this, we can say that every CTV made in India has
about Rs1,300 of Videocon in it.