Videocon targets Rs 5,000 cr turnover for Next

The Rs 13,000 crore Videocon group is targeting revenues of Rs 5,000 crore from its consumer durables and electronics (CDE) retail chain, Next, by March 2008. By that time, the chain should contribute a fourth of the group's revenues. "We will more than treble sales over the next two years and aim to be a market leader," a source said. Next operates with a profit margin of 10 per cent.

The group appears to be banking on its manufacturing base to source products and retailing to sell them. Besides, falling margins in consumer durables have made them look at other businesses, " observes the CEO of a rival consumer durables chain."If you have your own stores, dealers can not dictate terms to you," he points out.

Videocon Appliances posted revenues of Rs 1,170 crore for the year ending September 30, 2007 growing its business only marginally. Videocon Industries posted revenues of Rs 8,691 crore in the same period, a rise of 50 per cent in two years.

With the acquisition of Planet M, the group, which already had a presence in the retailing of IT products and games, has moved into music and apparel merchandising. It plans to invest Rs 500 crore in Planet M so as to have 1000 stores soon and is targeting a six-fold increase in turnover from around Rs 150 crore currently to around Rs 1,000 crore.It also plans to acquire smaller mobile and electronics retailers. .

Sunil Mehta, director (sales and manufacturing), Videocon Industries, told Business Standard that the group will manufacture with laptops, mobile phones and gaming solutions which should contribute sales worth Rs 1,400 crore to the group within one year. According to PricewaterhouseCoopers', the market for consumer durables and electronics is worth about Rs 32,000 crore. The market is expected to grow at 10 to 12 per cent annually and is likely to touch Rs 60,000 crore by 2008. The sector has been dominated by individual stores and region specific players such as Vijay Sales, Sumaria in Mumbai, Vivek's in Tamil Nadu, Harsha in Karnataka. Of late, corporate chains such as Future Group's eZone and Electronic Bazaar, Tata's Croma, Reliance Digital, Chabria's Jumbo Electronics have started expanding their presence.