White goods makers upbeat

Investments of more than Rs 7,000 cr lined up over next 5 years

With domestic demand growing fast and attractive export opportunities on the horizon, the Indian consumer durables industry has lined up investments of more than Rs 7,000 crore over the next five years to ramp up capacity.

Consumer electronics and white goods market leader LG Electronics India has already announced an investment of $250 million for increasing capacity in its Delhi and Pune plants. It is spending $60 million on a new facility to make Global System for Mobiles (GSM) handsets.

By 2010, LG India plans to have a turnover of $3 billion and become the export hub for South Asia, West Asia and parts of Africa.

"The success in India has been phenomenal and we foresee the Indian subsidiary to contribute 10 per cent of the total worldwide turnover by 2010," remarked SS Kim, vice-chairman and CEO, LG Electronics, while inaugurating the company's Pune plant last week.

Not to be left behind, the largest homegrown player in the sector, the Videocon Group, is planning to nearly quadruple its glass shell manufacturing capacity for colour picture tubes (CPTs).

"We will invest Rs 3,000 crore in our Bharuch plant to increase our glass shell capacity from 12 million units to 50 million units in the next five years," said Videocon group Chairman VN Dhoot.

The group is also in the process of setting up an integrated durables plant near Rishikesh in Uttaranchal at a cost of Rs 300 crore. "We have already brought the land, and the plant should be operational at the end of next year," he said.

India is currently the fourth largest market for colour televisions (CTVs) with annual sales of close to 9 million units. By 2010, it is estimated that demand will virtually double to 17 million units.

With an eye on such a huge demand, picture tube makers like Samtel Color and Hotline Teletubes are making significant investments in greenfield expansions. Samtel is set to double its present capacity of 6 million CPTs by 2006.

"Starting this financial year and by the end of 2006 we will be investing Rs 700 crore in Ghaziabag and Kota in Rajasthan, to not just increase picture tube capacity but also up our glass production for both the domestic and export markets," said Satish Kaura, chairman and managing director, Samtel Color.

Hotline too has invested Rs 300 crore in a greenfield plant at Malanpur in Madhya Pradesh to raise its capacity to 10 million CPTs. According to Hotline Managing Director VN Masaldan, the total CPT capacity in India will be close to 25 million by 2010, with the domestic market alone accounting for 17 million.

"The export opportunity will be huge as western countries are already moving to flat panels and LCD projection TVs. India, along with China, will become the CTV hub for all low-cost markets," he said. Samtel has already signed a large deal for supplying picture tubes with Thomson of France.