|
|
|
| |
            
|
Realising that one brand does not appeal to consumers of all colours, BPL is adding more brands to its portfolio.
Until recently, chances were that consumers looking for trendy new colour TVS (CTVs) would have glossed over BPL's offerings. The reason: At a time when other CTV manufacturers such as LG Electronics, Samsung, and Sony were flooding the market with feature-rich sets (digital viewing, perfect flat picture tube etc), the Bangalore-based BPL was still sticking to a conventional, but technologically sound, range of CTVs. It took a 19 per cent drop in sales in the first quarter of 2001-02 and an even sharper drop in profits (46 per cent) to jolt this market leader into action. So, recently, BPL unveiled a spanking new branding and marketing strategy, involving the creation of four sub-brands, each targeted at the four different socio-economic categories of the market. Says Ajit Nambiar, Managing Director, BPL: ''Earlier we used to have one brand of CTV for all consumers. But with competition hotting up, we had to go in for a multi-branding strategy. It will help us cater to the needs and aspirations of different customers.'' At the top end, brands like LG, Samsung, Sansui and Sony were eating into BPL's market share. In the lower end, others such as Akai, Aiwa, TCL and Konka were flooding the market with models priced ridiculously low. Under the new plan, BPL's entry-level brand will be Prima. It is being offered in sizes of 14, 20 and 21 inches, with prices ranging between Rs 7,000 and Rs 10,000. On top of Prima would be the regular BPL brand (a new sub-brand name is to be created) in the Rs 12,000-20,000 range. Right on top would be the ''Matrix'' range-a perfect flat TV, with a top price of Rs 50,000. BPL might also import digital TVS from Loewe, Germany, for the top end of the market. Linked to market segmentation is the issue of manufacturing and distribution. Prima, for example, will be outsourced and sold through distributors instead of dealers. Similarly, the BPL brand will use third-party assemblers at places where it does not have its own facility. The top two brands, however, will be manufactured in-house because of their sophistication in technology and design. Will the new strategy work? Among others, it will depend on how much BPL can spend on promotions of new sub-brands-an expensive proposition for a company that must count its every penny. -Dilip Maitra CONTROVERSY DSQ Software gets slammed by Sebi. But those who know its promoter, Dinesh Dalmia, aren't surprised.
Dinesh dalmia's list of controversies is probably as long as some of the codes his Chennai-based software company must write for its clients. The latest, however, could bring more trouble than the chairman and managing director of DSQ Software possibly bargained for. Last month, the Securities and Exchange Board of India directed Dalmia to cancel a deal to acquire Fortuna Technologies. The regulator said that the deal, which would have supposedly aided in catapulting DSQ to the top five of software list, reeked of irregularities, and barred DSQ from accessing the capital market for the next one year, and also banned Dalmia from trading in shares.
What happened? To recap, DSQ Software entered into a deal with three Mauritius-based companies-Technology Trust, Softee Corporation and New Vision Investment (the shareholders of Fortuna) to acquire the company through a swap arrangement (14 million equity shares of DSQ valued at Rs 999 crore on non-repatriable basis). These shares were in the demat form and, according to sources in Mumbai, had been allotted, and were even being traded on the Madras Stock Exchange. Then, out of the blue, the Calcutta Stock Exchange got 10 lakh equity shares in physical form with overlapping distinctive numbers. The first suspect is, of course, Dalmia and Sebi has questioned the issuance of physical shares to New Vision Investment-only this one is based in Delhi, not Mauritius. Not only is this company not connected to the transactions, its Delhi address was found to be bogus. ''Dalmia's credibility has always been in doubt, and the company's results a question mark,'' says G. Thirupathy, a Chennai-based financial consultant. In the past, DSQ has been threatened with court case by other financiers such as Credit Agricole Indosuez and Bankam. In 1999, the company's auditors Lovelock and Lewes refused to certify the accounts and instead asked for clarifications of transaction with group companies. NSE has already suspended trading on the DSQ counter. Dalmia is going to need a long time to debug DSQ. -Nitya Varadarajan Executive Tracking Mantra sees the exit of Atul Kanwar, while Carrier announces a successor to Anil Srivastava
The high-profile President and CEO of Mantra Online, Atul Kanwar, has moved on to outsourcing and e-business firm, Syntel, as its coo. His exit follows the restructuring at the Bharti group, which owns Mantra. The grapevine tells us there may be more churn at Bharti. Spring cleaning at HLL? The company denies it, but from what we hear, HLL is on a major perform-or-perish spree. The unique thing about this move is that senior guys (read: 20 years of experience) are being asked to go. Some senior exits have already happened. We were the first to tell you about the expected senior movements at Carrier Aircon. So, it was no surprise to hear last fortnight that MD Anil Srivastava was leaving the company. Carrier has already announced internal candidate G. Raghavan as a successor. But from what we hear this is merely an interim move. Raghavan, who was based in the US, has been called in to keep the seat warm until a successor is found. In other movements, L. Ram Kumar, business head at ti Cycles migrates to Sterlite as President, Corporate Business, and Raja Gopalkrishnan from ABN Amro (Consumer Banking Head-North) to Conseco as Vice-President. CONSUMER DEMAND Early estimates point to a drop in demand in rural markets. If crops fail, the squeeze will get tighter.
The last time industry was in the grips of a slowdown (in 1998), many companies turned to the rural buyer for growth. This time round, the slowdown appears to have spared none. Agricultural incomes have dropped, and practically all products-consumer durables, FMCGs and consumables-are facing hard times even in rural India. The latest figures from ORG-MARG's Rural Consumer Panel reveal that the penetration of most consumer goods (biscuits, fabric whiteners, coconut oil, edible oil, hair wash preparations, safety razor blades, toilet soaps, toothpaste, tooth powder, washing cakes/bars, washing power and tea) fell in June 2001 compared to the same month last year. Even sales volumes of commodities like safety razors, toothpaste, tooth powder and washing powder were lower this quarter.
Another set of figures from the Confederation of Indian Industry (Ascon survey) suggest that production of semi-urban and rural consumer durables like mopeds and black and white TV sets was estimated at 54 and 25 per cent lower in April-June 2001 over April-June 2000. Similarly, growth in production of audio products was flat and that of watches and clocks had come down from 27 and 20 per cent respectively to 10 per cent during the period. In colour televisions, there has been a 10 per cent drop in sales in the first six months of 2001. ''The size of the colour TV market is around 5 million per annum and only 2 million sets were sold in the January-June period,'' says Pradeep Tognatta, Head, Sales & Marketing, LG Electronics (India). However, rural markets are performing a wee-bit better than semi-urban and urban markets, he adds. According to Iswar Natarajan, Chief Economist, National Council of Applied Economic Research (NCAER), there are four preconditions to growth. First, low penetration (as in the case of shampoos and colour TVS). Second, low usage (such as toilet soaps). Third, income growth and, fourth, population increase. But growth in GDP and agriculture has dropped and incomes of small farmers, in particular, have slumped. ''This invariably results in lower demand for consummables,'' explains Natarajan. ''In value terms, increase in demand for consumer goods will be much less,'' he says. Over the last two to three years, when consumer durables manufacturers were aggressively marketing their products, an NCAER study found that the replacement rate in television sets had increased from 10 per cent in 1996 to around 17 per cent in 1999. This happened because manufacturers had introduced attractive exchange offers in order to push up demand. As a result, many consumers had advanced their purchases and this may be the reason, Natarajan says, why growth rate in TV sets has come down. In fact, in 1998, the number of TV sets replaced was more than the number of second-hand TV sets sold. In case of consumables, soap sales of Hindustan Lever have dropped by 4.4 per cent in the first six months of this year. Almost 50 per cent of HLL's sales of soaps come from rural India. But HLL is not in the least bit worried. ''There is enormous room for growth in all our product categories across the country, and particularly in rural markets,'' says an HLL spokesperson. For instance, in soaps, the penetration in rural India is as high as 98 per cent, but per capita consumption is only 400 gm. Why? An HLL study discovered that while people in rural India wash their bodies seven days a week, they use soap on only four bathing occasions. Similarly, the penetration of laundry products in rural India is about 93 per cent, but the per capita consumption is only 2 kgs. In personal products (like shampoo, toothpaste etc), the penetration and consumption are much lower. According to Vikram Kaushik, Executive Vice-President (Marketing), Colgate-Palmolive (India), ''The general slowdown in consumer products is the result of factors like stagnant agricultural output, fall in profit margins of farmers, coupled with rationalisation of excise duty at 16 per cent (in the case of toothpaste).'' Companies like HLL and Colgate-Palmolive are hoping that low-priced sachets would help increase consumption. But they would still need the help of rain god. -Swati Prasad
|
|
Issue Contents Write to us Subscription Syndication INDIA TODAY | INDIA TODAY PLUS | COMPUTERS TODAY |
TEENS TODAY
© Living Media India Ltd |
 |
 |
