LOVELY PROFESSIONAL UNIVERSITY

TOPIC- VIDEOCON

SUBMITTED TO SUBMITTED BY MS. POOJA KANSRA ANKUR MEHTA REG NO – 10903486 BBA (HONOURS)

ACKNOLEDGEMENT

Education becomes more meaningful when its theoretical aspects are

combined with practical experience. This provides an opportunity to the

students to improve their understanding of the study. BBA is a course,

which combines both its theory and application as its content of study in

the field of management as a part of this course, every aspirant has to

submit a Project. The purpose of this Project is to expose the students or

management sciences to real business situation and to use theoretical

knowledge into practical experience. In order to use the theoretical

knowledge I done Project on a study of VIDEOCON

I am very thankful to my project guide Ms POOJA KANSRA who gave me his

precious time for the completion of project.

ANKUR MEHTA

BBA(HONOURS)

ANNEXXURE

FRAMEWORK TITLE NAME: VIDEOCON

COURSE CODE: ECO 151

COURSE INSTRUCTOR: Ms. Pooja Kansra

DATE OF ALLOTMENT:

DATE OF SUBMISSION: 10 December 2009

STUDENT ROLLNO: 38

SECTION NO: Q1906

DECLERATION

I declare that this assignment is my individual work. I have not copied form any other student’s work or from any other source except due acknowledgement is made explicitly in the text nor has any part been written for me by another person.

Student signature

Evaluators comment

………………………………………………………………………………………..

Marks obtained……….out of……………………….

HISTORY OF VIDEOCON

Videocon Leasing & Industrial Finance Limited was incorporated on 4th September, 1986 as Adhigam Trading Private Limited. In terms of the necessary resolutions passed under Sec. 21 of the Companies Act, 1956, the name of the Company was changed to Videocon Leasing & Industrial. Finance Limited on 14th February, 1991. The Company received a fresh certificate of incorporation from the Registrar of Companies, Gujarat at Ahmedabad on 14th February, 1991. Adhigam Trading Pvt. Ltd. (ATPL) was promoted by Mr IndrakantS T. Parikh and Naishad I. Parikh in September, 1986 as a private limited company and was initially engaged in the business of trading in paper tubes. In September, 1988 the Company decided to diversify in the business of Lease financing, hire purchase and investment activities. The Management of the Company underwent a change in the Year 1990-91 by way of transfer of equity shares to the Videocon Group. 1,00,000 Equity Shares of Rs. 10/- each of Adhigam Trading Private Limited were purchased by the Videocon Group at a premium of Rs. 3/- per share in April,1991. The total consideration of Rs. 13 Lakhs was paid by Cheques.

THE COMPANY & THE VIDEOCON

GROUP

As detailed earlier, during the initial years the Companies in the Videocon Group had placed business with VLIF leading to growth in its lease financing activities. The group companies have increased the fund base of the Company by infusing funds in form of share capital and unsecured loans. As detailed in the Capital Structure, the promoters currently hold 75% of the paid up capital of the Company. The composition of promoters holding is Videocon International Limited 14,90,000 Shares (13.1% of VLIF's Capital), Videocon Appliances Limited 12,500 Shares (0.1% of VLIF's Capital), the Dhoot Family and their friends & associates 70,10,000 Shares (61.8% of VLIF's Capital). As Detailed earlier, the post issue holding would be of the order of 25.50% of the post issue capital of Rs. 33.375 Crore (assuming that all the OCDs are converted @ Rs.150/- per Share and Equity Shares are issued against all the outstanding warrants).

2005

-Videocon acquires entire stake of Electrolux India on July 07, 2005

-Videocon Industries Ltd has informed that the Company has completed Placement of 94, 10,145 Global Depository Receipts (GDRs) at the price Of US$ 10 per GDR, aggregating to US$ 94.10 million on Private Placement Basis to AB Electrolux (Public). Each GDR represents one Underlying equity share of the Company.

BOARD OF DIRECTORS Name Designation

Venugopal N Dhoot Chairman and Managing director

Kuldeep Drabu Director

Karun Chandra Srivastava Director

Arun Laxman Bongirwar Director

Gunilla Nordstrom Nominee Director

Birendra Narain Singh Nominee Director

Name

Designation

Pradipkumar N Dhoot Whole Time Director

S Padmanabhan Director

S C N Jatar Director

Satya Pal Talwar Director

Ajay Saraf Nominee Director

CAPITAL STRUCTURE

Capital Structure

Period Instrument Authorized Capital

Issued Capital - P A I D U P -

From To (Rs. cr) (Rs. cr) Shares (nos) Face Value Capital

2007 2008 Equity Share 214.75 214.75 229450764 10 214.75

2006 2007 Equity Share 214.75 214.75 221093701 10 214.75

2005 2006 Equity Share 214.75 214.75 220985833 10 214.75

2004 2005 Equity Share 214.75 206.53 206526145 10 206.53

2003 2004 Equity Share 35 32.89 32885050 10 32.89

2002 2003 Equity Share 35 32.89 32885050 10 32.89

2001 2002 Equity Share 35 18.16 18163950 10 18.16

2000 2001 Equity Share 35 18.16 18163950 10 18.16

1998 2000 Equity Share 35 18.16 18163950 10 18.16

1997 1998 Equity Share 35 16.45 16445078 10 16.45

1996 1997 Equity Share 35 16.36 16362513 10 16.36

1995 1996 Equity Share 35 11.35 11350000 10 11.35

1993 1995 Equity Share 35 11.35 11350000 10 11.35

1992 1993 Equity Share 35 11.35 11350000 10 11.35

BALANCE SHEET

Balance Sheet of Videocon Industries ------------------- in Rs. Cr. -------------------

Jun '04

Sep '05 Sep '06 Sep '07 Sep '08

12

mths 15 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 32.89 206.53 266.85 266.95 275.31

Equity Share Capital 32.89 206.53 220.84 220.95 229.30

Share Application Money 0.00 65.24 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 46.01 46.01 46.01

Reserves -41.21 3,420.56 3,847.63 5,357.91 6,538.49

Revaluation Reserves 0.00 951.84 924.57 53.52 0.00

Net worth -8.32 4,644.17 5,039.05 5,678.38 6,813.80

Secured Loans 0.00 2,776.10 3,608.39 3,343.50 4,401.25

Unsecured Loans 90.07 473.47 1,352.80 1,916.14 3,604.34

Total Debt 90.07 3,249.57 4,961.19 5,259.64 8,005.59

Total Liabilities 81.75 7,893.74 10,000.24 10,938.02 14,819.39

Jun '04

Sep '05 Sep '06 Sep '07 Sep '08

12

mths 15 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 116.62 5,578.62 7,127.93 8,083.16 8,947.78

Less: Accum. Depreciation 6.70 2,286.77 2,847.09 3,376.67 4,310.63

Net Block 109.92 3,291.85 4,280.84 4,706.49 4,637.15

Capital Work in Progress 0.00 699.23 608.28 612.98 1,289.52

Investments 8.29 338.79 1,781.17 2,092.50 2,695.59

Inventories 0.00 873.02 1,299.86 1,393.64 1,568.86

Sundry Debtors 0.68 997.12 1,117.29 1,314.25 1,582.89

Cash and Bank Balance 0.26 1,359.87 94.63 170.63 184.71

Total Current Assets 0.94 3,230.01 2,511.78 2,878.52 3,336.46

Loans and Advances 104.96 1,183.17 872.06 1,545.48 4,101.65

Fixed Deposits 0.02 36.14 1,041.63 718.47 203.57

Total CA, Loans & Advances 105.92 4,449.32 4,425.47 5,142.47 7,641.68

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 142.39 815.76 926.70 1,323.22 1,292.58

Provisions 0.02 69.68 168.80 293.22 151.97

Total CL & Provisions 142.41 885.44 1,095.50 1,616.44 1,444.55

Net Current Assets -36.49 3,563.88 3,329.97 3,526.03 6,197.13

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 81.72 7,893.75 10,000.26 10,938.00 14,819.39

Contingent Liabilities 29.39 207.72 81.65 112.59 178.17

Book Value (Rs) -2.53 175.62 184.11 252.33 294.96

PROFIT AND LOSS

Profit & Loss account of Videocon Industries

------------------- in Rs. Cr. -------------------

Jun '04

Sep '05 Sep '06 Sep '07 Sep '08

12

mths 15 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 12.07 5,664.68 7,580.33 8,710.26 10,105.13

Excise Duty 0.00 204.42 361.51 424.83 351.47

Net Sales 12.07 5,460.26 7,218.82 8,285.43 9,753.66

Other Income 8.71 -116.84 -12.61 166.22 -133.22

Stock Adjustments 0.00 32.63 103.33 31.87 2.30

Total Income 20.78 5,376.05 7,309.54 8,483.52 9,622.74

Expenditure

Raw Materials 0.00 3,102.90 4,266.07 4,986.66 5,293.35

Power & Fuel Cost 0.00 27.37 66.81 73.16 86.77

Employee Cost 1.32 49.53 94.70 105.35 115.82

Other Manufacturing Expenses 0.00 888.85 919.47 915.07 1,199.08

Selling and Admin Expenses 5.67 522.46 546.10 542.29 638.09

Miscellaneous Expenses 5.79 45.97 88.73 22.53 30.59

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Total Expenses 12.78 4,637.08 5,981.88 6,645.06 7,363.70

Jun '04

Sep '05 Sep '06 Sep '07 Sep '08

12

mths 15 mths 12 mths 12 mths 12 mths

Operating Profit -0.71 855.81 1,340.27 1,672.24 2,392.26

PBDIT 8.00 738.97 1,327.66 1,838.46 2,259.04

Interest 7.60 244.96 254.75 337.17 431.86

PBDT 0.40 494.01 1,072.91 1,501.29 1,827.18

Depreciation 2.29 320.15 484.00 418.39 660.21

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax -1.89 173.86 588.91 1,082.90 1,166.97

Extra-ordinary items 0.00 2.36 0.30 3.54 0.72

PBT (Post Extra-ord Items) -1.89 176.22 589.21 1,086.44 1,167.69

Tax -0.15 -166.03 95.16 227.68 312.67

Reported Net Profit -1.74 427.68 818.50 855.22 982.11

Total Value Addition 12.77 1,534.18 1,715.81 1,658.40 2,070.35

Preference Dividend 0.00 2.50 3.39 3.68 3.68

Equity Dividend 0.00 55.19 77.35 80.30 22.95

Corporate Dividend Tax 0.00 8.09 11.32 14.27 4.53

Per share data (annualised)

Shares in issue (lakhs) 328.85 2,065.26 2,209.86 2,210.94 2,294.51

Earning Per Share (Rs) -0.53 20.59 36.89 38.51 42.64

Equity Dividend (%) 0.00 25.00 35.00 35.00 10.00

Book Value (Rs) -2.53 175.62 184.11 252.33 294.96

CASH FLOW STATEMENT

Cash Flow of Videocon Industries ------------------- in Rs. Cr. -------------------

Jun '04 Sep '05 Sep '06 Sep '07 Sep '08

12 mths 15 mths 12 mths 12 mths 12 mths

Net Profit Before Tax -1.89 451.83 913.67 1082.90 1294.78

Net Cash From Operating Activities 17.14 -1792.99 1351.72 1133.68 -1193.44

Net Cash (used in)/from Investing Activities

0.19 -4492.92 -2843.94 -1268.50 -1909.68

Net Cash (used in)/from Financing Activities -17.21 7681.64 1232.47 -112.33 2602.30

Net (decrease)/increase In Cash and Cash Equivalents

0.12 1395.73 -259.76 -247.15 -500.82

Opening Cash & Cash Equivalents 0.16 0.28 1396.01 1136.26 889.11

Closing Cash & Cash Equivalents 0.28 1396.01 1136.25 889.11 388.28

AUDITOR’S REPORT

1. We have audited the attached Balance Sheet of VIDEOCON INDUSTRIES LIMITED, as at 30th September, 2008, Profit and Loss Account and also the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, on the basis of such checks as considered appropriate and according to the information and explanations given to us during the course of the audit, we give in the Annexure hereto a statement on the matters specified in Paragraphs 4 and 5 of the said Order. 4. Attention is invited to Note No. B-9 of Schedule 15 regarding incorporation of the Companys share, in the operations of the joint ventures based on the statements received from the respective Operator. The Company has received the audited financial statements for the period upto 31st March, 2008 and un-audited financial statements for the period 1st April, 2008 to 30th September, 2008, in respect of Joint Venture Rawa Oil & Gas Field and un-audited statements for the period ended 30* September, 2008 in respect of other joint ventures on which we have placed reliance. We have also placed reliance on technical /commercial evaluation by the management in respect of allocation of development cost to producing properties depletion of producing properties on the basis of proved remaining reserves and liability for abandonment costs. 5. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; b) In, our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books. Proper returns adequate for the purpose of our audit have been received from branches not visited by us. The branch

Auditors Reports have been forwarded to us and have been appropriately dealt with; c) The Balance Sheet, Profit and Loss account and the Cash Flow Statement dealt with by the report are in agreement with the books of account. d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956. e) According to the information and explanations given to us and on the basis of written representations received from the directors as on 30th September, 2088 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th September, 2008 from being appointed as a director in terms of Section 274(1) (g) of the Companies Act, 1956. F; in our opinion and to the best of our information and according to Explanations given to us, the said financial statements, read together With the significant accounting policies, and notes thereon, give the Information required by the Companies Act, 1956, in the manner so Required and give a true and fair view in conformity with the Accounting principles generally accepted in India: i) In the case of the Balance Sheet, of the state of affairs of the Company as at 30th September, 2008; ii) In the case of the Profit and Loss Account, of the profit for the Year ended on that date, and iii) In the case of the Cash Flow Statement, of the cash flows for the Year ended on that date.

ARTICLE ON THE INCREASE DEMAND OF VIDEOCON Videocon Industries sees strong demand for products such as televisions, washing machines and refrigerators with improving consumer sentiments, and expect sales to increase, particularly during the festive season starting next month. The consumer durables major witnessed 51% drop in standalone net profit to Rs 124 crore for the quarter ended June 30, 2009 compared with Rs 255 crore in the same period a year ago, due to lower profits from its oil business besides high interest costs and depreciation. Videocon holds 25% stake in a four-party joint venture which is into exploration and extraction of crude oil. Public sector firm ONGC is the largest investor in the venture. Videocon’s oil business, which contributed 10% to its total revenues last quarter, is dependent on crude oil prices. Speaking to ET NOW, Videocon Industries’ chairman Venugopal Dhoot attributed the lower profits to drop in oil prices compared to last year: “Our international operation in Brazil is progressing well, even though we have not started production yet. Once we go into production there, additional profits will come from the international operations. As of today, all earnings in oil business is coming from Ravva oil field in India.” The company, whose main business is consumer electronics, also saw net sales decline around 6% to Rs 2,461 crore largely due to decline in revenues from the oil business. Revenues of consumer electronics unit rose 10% to Rs 2,213 crore during the quarter over the same period last year. Videocon operates under various brands including the mother brand Videocon besides Sansui, Kenstar, Kelvinator and Akai. It also markets and sells products of Swedish appliance maker Electrolux in India. Profits from consumer electronics business rose 8% during the quarter helped by lower raw material cost but this was outweighed by 66% drop in earnings from oil business. These halved overall net profits at a standalone level for the quarter. The total cost of raw materials plunged around 20% during the quarter and thereby helped the company control overall cost of production. On the other hand, interest burden increased 55%. Talking about demand for the electronics business, Mr Dhoot said: “Sales are moving up because of various stimulus packages extended by the government over the past few months.”

REVENUE STREAMS

STRENGTH

Videocon is in an excellent position, both, operationally & financially, to increase its global market share and emerge as the last surviving player in the consumer electronics segment, with its backward integration as well as with its on-going organic & inorganic growth.

An ever-growing working population characterizes India, rising consumerism, increasing purchasing power and a more receptive rural populace; fuelling demand for consumer electronic goods.

Videocon boasts of a diverse product portfolio & a multiple brand basket, and together, both cater to almost every need across different socio-economic market segments; thereby capturing a greater aggregate share of market.

With strategically located manufacturing bases and an enviable distribution network of around 90 branch offices, 10,000 distributors & 400 after-sales service centres across India, it enjoys a unique 80% plus penetration in the market place.

A high degree of backward integration ensures that VIL has most of the vital components under its control and bestows upon it unique benefits

over competition – uninterrupted supply, shorter turnaround time, cost advantage and quick adaptation to changing customer needs.

VIL is looking to strengthen its presence through a host of big ticket acquisitions/asset buyouts – Daewoo Electronics (South Korea), Chunghwa Picture Tubes (Taiwan), Pioneer (Japan) and other brown-field expansions will help VIL expand its horizons.

VIL’s glass division, VNG, is the largest single location glass shell plant, enjoying economies of scale and a leading position in the global glass shell industry. Additionally, integration of its acquired Thomson Color Picture Tube (CPT) plants with its Indian business would not only reduce the cost of production, but also give its glass shell units a ready market.

The Thomson acquisition includes R&D centres and access to over 2,000 patents, which would enable VIL to launch new products as well as counter the threat posed by the conventional TV market being rapidly overtaken by hi-tech products in overseas markets.

Increasing demand & high prices in the oil & gas industry will not only lead to improved realizations, but along with low operating costs that the Ravva oil & gas field enjoys; it can translate into a bonanza for VIL.

VIL has earmarked USD 13 MM (FY07) & USD 24 MM (FY08) as capex for its oil & gas business, in order to increase the extraction from the field. It has also embarked upon Infill Well Drilling and exploration & production of three new blocks; LM-403, Back Fault Block & LO-110, all in the Ravva field. The probable reserves in the Ravva Oil field are estimated to be as high as 400 MM barrels, of which only about 160 MM barrels have been produced. Thus, a huge upside potential exists for the company.

VIL is exhibiting substantial panache by fruitfully working towards bidding for and more often than not, attaining exploration and production rights in many countries around the world. It is well on its way to earning remarkable profits & achieving a prominent global standing.

CONCLUSION

Given that Videocon's big bet is on the broad technology and business trends, it's imperative to ask whether it's going in for too much capacity on a product that may soon be overtaken by new technology. Currently, conventional CTVs account for the majority of sales, even in the West. That's the market Videocon's products will ultimately be selling in.

However, a sharp drop in plasma and LCD (liquid crystal display) prices could hit this plan hard, especially in the global markets, where it may be left saddled with huge capacities and high operating costs.

But Videocon is betting on the fact that at a time when the larger global manufacturers are graduating to newer technologies like LCD, PDP and organic light-emitting diode, the demand for plain-old cathode-ray tubes (CRTs) will be filled up by the emerging markets, where volume growth is likely to be high. A decent LCD TV is available for about $2,000. The most expensive CRT TV is available for $600. As long as LCD and plasma prices are twice as expensive, the market share of CRT cannot come down below 75 per cent. Besides, the world market for CRT is estimated to be around 131 million units in 2009.

The other big challenge Videocon will face is from the rising input costs. Besides, there is the issue of breaking new ground in terms of geographies and product segments. Videocon needs to get the right professional managerial talent in place to fulfil its global ambitions. The coming years will be a revelation for Videocon with its oil and gas business slowly catching steam.