Sunday, 5 May 2013

Videocon Industries-Financial Analysis Dissertation

Dissertation on Financial Analysis in Videocon Industries-Finance Project Report

Synopsis for MBA Project Report on Videocon Industries-Finance Topic

• Videocon Industries is a one of the major players in the consumer goods industry.

• The Cost of marketing, advertising and after sale services are increasing tremendously.

• The company’s current debt-equity is looking a bit high in comparison with its peers and stood at around 1 x.

• The promoters have pledged 36.4 per cent, or 83.55 million shares.

• Due to rise in interest and depreciation costs NPM for the Dec.quarter declined to 2.90 % from 6.60%
of last quarter.

• The topline of the company is expected to grow only at a CAGR of 5.98% over FY07 to FY10E.

• The company plans to enter into power equipment business and expects to clock revenues of Rs 10000
mn by 2011.

Company Profile

Videocon Industries was incorporated in 1986. The company has two core activities, which include the manufacturing, assembly, marketing and distribution of consumer electronics and home appliances, and exploration and production of oil and gas.The company presently has seven operating business divisions, in which major divisions are consumer electronics, home appliances, components, etc.

Videocon started its oil and gas division a few years ago, and presently holds a 25 per cent stake in the Ravva oil field, located on the Krishna-Godavari basin.The operating cost of the Ravva oil field is supposed to be the lowest in the world, at less than EUR 0.78 per barrel of oil. Internationally, it has interests in oil blocks, one in Oman, two in Australia and one in Timor Sea near Indonesia.

Strategic Direction

·         Videocon Industries Limited (VIL) manufactures and markets consumer electronics products and home appliances, as well as manufacturing components and exploring for oil and gas. Within consumer electronics, it has a range of brands that make it one of the largest NBOs in India. Videocon competes in analogue and digital TVs, home cinema and hi-fi systems, and DVD and portable media players.

·         The Videocon Group has global ambitions, acquiring companies abroad.  At the same time, diversification is high on its agenda, with forays into steel production and telecoms on the cards.

·         In July 2006, Videocon Industries Ltd was given the go-ahead to merge EKL Appliances (the erstwhile Electrolux Kelvinator Ltd) into the parent company.  Net sales for the year ended September 2007 were expected to grow by 17% over their 2006 level, although profitability was under threat.

·         VIL is looking to rationalise its costs and improve its profitability, in order to remain competitive in the Indian market.  The company is looking to improve its productive efficiency by introducing better control processes and managing its inventories better towards this end.

·         VIL will reduce its dependence upon the consumer electronics and home appliance business, and thereby insulate the company from the ups and downs of a competitive market in which imports are hurting profitability.  It is likely to remain a large business group in India, but its position in consumer electronics may weaken in the future.

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