Meltdown forces Godrej to defer phase-II colour TV launch till Q3

The economic slowdown has forced Godrej (GODREJCP.NS : 281 -7.6) Appliances to postpone its second-phase launch of colour televisions in other parts of the country by six to eight months. The company had forayed into Rs 9,000-crore colour television industry in Andhra Pradesh in October last year on a pilot basis.

"After Andhra, our second phase of operation was scheduled to start in early 2009. But because of the overall recession that has set in the economy, the company has postponed the launch of TVs in other parts of the country till the third quarter of this year," says Kamal Nandi, vice president (sales and marketing), Godrej Appliances.

In the middle of 2008, the company had entered into an alliance with a European company for contract manufacturing of televisions at its facility in Uttarakhand. The facility that has come up at an initial investment of Rs 150 crore is currently rolling out televisions ranging from 15 inches to 42 inches at a price of Rs 6,000 to Rs 45,000. "Since the number of units sold in Andhra is small, we have an outsourcing arrangement. But once the operation is in full swing, we will undertake manufacturing on large scale at our plant," says Nandi without disclosing anything about the next state of expansion.

Over 12.5 million units of colour television were sold in 2007, a year-on-year growth of 10%-12% and is expected to go up to 15 million units by 2010.

Godrej Appliances, a new entrant in the industry that is pegged at Rs 13,000 crore, is eyeing a 10% market share in the first year of operations.

The company is currently sourcing the picture tube-based flat-screen televisions in the first phase of operations, importing the LCD televisions and selling them under the brand Godrej in Andhra Pradesh. The colour television market in India is pegged at 10.5 million units of which Andhra Pradesh forms about 0.86 million units. Godrej claims to occupy 3% market share in Andhra Pradesh ever since its launch in October last year.

According to an industry analyst, Godrej has entered the new category at a time when existing players like LG, Samsung and others are finding it tough to continue with the growth momentum.

Consequently, it will not be before the end of next year that the company could achieve the target of 10% market share, he says.