Videocon to acquire Onida – Rumor
An interesting news has reached our ears from the industry circles. As part of the rationalisation going on in the Home appliances segment, Videocon may be about to acquire Onida. This is an unconfirmed news and we want to analyze for a moment why there could be a possibility.
Ever since the market opened up to foreign players, Indian companies had found the going increasingly tough. They were not able to compete with the costs and offerings from multinational giants like Philips, Samsung, LG etc.
In the mid 80′s there were quite a few TV manufacturer in India. ECL, Dyanora, Solidaire, Weston, Crown and Optonica were some of the familiar brands which shut their operations in mid 90′s, because they were no longer competitive nor had the marketing edge to sell their products in the Indian market.
In this situation, some of the players made a bold move to have technological tie ups with foreign companies. Some of the prominent partnerships established were:
- BPL – Sanyo ( in our earlier article [see below] we mentioned that this is now more than just a technological tie-up. Sanyo and BPL are now equal equity partners in the JV)
- Onida – JVC
- Videocon – National Panasonic
These three companies were pretty dominant in Indian market for quite some time. Philips was a late entrant in this scene and managed to capture a significant portion of the market.
But what really changed the situation was the entry of Samsung and LG. These Korean companies were very aggressive with their marketing. Their local presence and strong brand appeal were able to attract a lot of customers and we believe LG is now the leader in the Indian Television market.
Videocon is now focused on communicating their “Indian Multinational” image with recent acquisitions like Thomson, Kenstar, Kanchan foods etc. They are not only manufacturing and selling televisions under their own brand name, but are also acting as Equipment Manufacturers for companies like Sansui and Toshiba.
Onida with their memorable ad campaigns were a force to reckon in the past. Now those golden days are long gone, when consumers used to associate with their “different” ad campaigns.
We of course are not in a position to confirm anything on this matter, but the decision could be welcome to both groups in order to pool their strengths so that they can take on the competition from Korean Giants – Samsung and LG.
Pretty much the same thing had happened in the mobile phones sector were late entrants like Nokia created a huge market share for themselves and left no choice for the other players but to re-strategize their game.
In the mobile space, Sony tied up with Ericsson, Benq tied up with Siemens and the former is now a formidable competition for Nokia along with the revamped Motorola.
Also read our coverage on televisions :
Television – A preview on offerings
Television Brands in India – Part 1
Television Brands in India – Part 2
We welcome your comments and views on this topic.
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This rumour is interesting because, Onida seems to be a stronger brand today than Videocon. Be it TV or Split A/C. So the market can react better to Onida acquiring Videocon than vice-versa.
If the acquisition is for technology, I am wondering what does Videocon see in Onida, on the technology.
Background: Today CRT technology is on its exit (including Plasma), making way for LCD. So CRT prices are slashed by quality brands like Sony (29″ Wega at Rs.17K today) and players like Onida (29″ at Rs.12-14K).
Today Onida and Godrej get split A/C from the same source in China (possibly Voltas too), and LG/Samsung is giving a good fight on the feature, price and marketing front (carefully avoided comparing to the high-end segment of Carrier, O-General, Hitachi, Daikin etc).
So there is nothing attractive from an acquisition standpoint. In the case of previous acquisition of Videocon, ie. Electrolux, atleast its a modest brand-name, still nothing much happened on the business front for Videocon. To me, Videocon Top-Management is falling short of ideas, especially good ones.
Just read this :
http://www.vccircle.com/2007/11/06/videocon-buys-music-retail-chain-planet-m-for-rs-200-crore/
I forgot to add, Sony/Samsung have their own display and retail show-rooms, but they do not carry other brands and give the retailers a good margin. In the case of NEXT it is a multi-brand retail store, so Videocon dealers/retailers need not take a positive note of NEXT.
Performance of Videocon’s other acquisition “Planet M” is yet to be seen.
BTW, we still have a 15 year-old 21″ Videocon colour TV in good working condition (Toshiba picture tube)
Videocon as a company is much more financially sound than Onida. They are better diversified and are present in multiple segments. Their market capitalisation is pretty impressive – >$4 Billion.
By comparison Onida is a really tiny player with scarce access to capital. Except for their brand which does have some equity with consumers, they really are hard up right now. So the news is not surprising, really.
Let’s see what happens…
[...] Videocon to acquire Onida – Rumor [...]
I wasnt aware of the many ripples and depth to this story until I surfed here through Google! Great job.
do not drink and drive…!
anytime onida is a strong and a better brand
i meant to say onida a better brand when compared to videocon