Beltek India is spreading its wings with a foray into the white goods segment. Following its tie-up with Maharaja Appliances, which has taken a 50 per cent stake in the company, Beltek will invest Rs 20 crore in putting into place its initial expansion plans.
Says Beltek India Ltd chairman YP Verma,”˜”˜We will exploit the joint strength of the two groups. The foray into white goods is part of our long-term growth strategy of expanding and diversifying into related segments. It will also help position us as a complete consumer durables company,”
The venture makes Beltek the first consumer electronics company among regional players to enter the segment. The move comes even as regional players, who had been following an aggressive price-led strategy in the smaller markets, have been facing tough times with some like LG getting aggressively into the rural and semi-urban market.
Says Beltek India vice-president and CEO RS Kandhari, “˜”˜As a result, the regional players were not able to exploit the 15-20 per cent growth that took place in the overall CTV market last year. While volume growth in the case of most of the regional players has remained stagnant, value growth has also been hit due to the 15-16 per cent erosion in prices.”
Other brands in the same bracket include Oscar, Salora, Weston and Texla, which together have been commanding a sizeable share of the CTV, DVD and VCD segments in the smaller markets.
Beltek hopes this attempt at becoming a complete consumer durables brand will help it counter the onslaught of MNCs in the smaller markets by taking the fight to their domain in the metro markets.
Beltek has already taken its first steps with the launch of a washing machine in December 2003 and has sold 1,100 units so far. The products slated for launch this year are microwave ovens (before Diwali), direct cool fridges and commercial deep freezers (by November) and airconditioners by January. It will continue to pursue a price-led strategy in these categories too. Its 1.5 tonne AC for instance would be priced around Rs 10,990 and 160 litre fridge at Rs 5,990.
It is also setting aside a budget of Rs 12-15 crore and will begin aggressive advertising from the festive season. Last year’s media spend was Rs 3.5 crore.
The company achieved a turnover of Rs 97 crore last year and is targeting Rs 167 crore this year. It estimates that the new foray should help push turnover to Rs 250 crore next year.
Following the entry of Maharaja Appliances, Beltek will source its white goods products from Maharaja’s new facility in Baddi (HP), which has a total annual production capacity of three million pieces. Beside this, Beltek is also setting up a new plant in Sector 63, Noida, which will be operational by Diwali. It will have a capacity of manufacturing 2.5-3 lakh CTVs. It currently sources its products from its facility at Mohali and Ludhiana.
Says Mr Kandhari, “˜”˜The Baddi facility will cater to both brands. There will be no common branding, product lines will be separate with some cosmetic differences.”
From The Financial Express