How the Rs-220-Cr local TV brand Super Plastronics won over Kodak TV
E&Y says the television market in India, pegged at Rs 75,000 crore currently, will be Rs 1,30,500-crore-strong by the end of this decade
Everyone remembers Kodak, whose image technologies dominated 90 percent of the photographic film, and 85 percent of the camera market. In India, everyone has that special ‘Kodak moment’, where you had to travel with a Kodak camera, and film to bring memories back home.
Over the last decade, however, Kodak’s 100-year history did not help as the company saw a decline in revenues, and it filed for bankruptcy in 2012. It is now just about getting back on its feet, with R&D focusing on the future of digital imaging.
Its revival, though, is being led from India, after the company licensed its image technology for televisions to a medium-sized business called Super Plastronics Pvt Ltd. This is how Kodak began turning the corner in a market where it was non-existent.
Two years ago, Avneet Singh Marwah was wondering how his father’s two-decade-old contract manufacturing company could scale up. He had two options - the first was to maintain Super Plastronics’ deep relationships with brands such as Intex, T-Series, and Zebronics, and continue working with them to design TVs.
The second option was to build the company’s local portfolio of brands, like Beltek and Crown. Avneet soon realised that both were ideas that could not scale beyond the Rs 220 crore revenue that the company had generated last year. At best, the business would grow in high single digits.
For the 29-year-old Avneet, the world was wide open. On one end there were digital businesses, and the rise of e-commerce, which had redefined brand presence and distribution. He realised that the legacy company had to reinvent, and double revenues or remain a contract manufacturer with three manufacturing plants.
“I travelled to the US to look at a few tie-ups. Nothing worked because the agreements were too one-sided. In early 2016, I found out through a contact in the industry that Kodak wanted to license its TV technology to partners,” says Avneet, who is the CEO of Super Plastronics.
He travelled to Rochester, and presented before Kodak’s senior team that the brand would sell very well in India. “At first, they did not believe it because they knew that brand was known for cameras, not TVs, in this country,” he says.
Avneet, however, left his card on the table and invited them to check out his set up in India. In a month’s time, a team from Kodak had checked upon Avneet’s credentials. The team believed it could be on to something good because of the market size, and growing consumption.
Annual sales of flat screen TVs are pegged at 10 million per year, according to various analyst sources. The market is dominated by Samsung, LG, and Videocon, and these are followed by a slew of brands, both Indian and international.
Prices for a 32-inch television go from Rs 15,000 to 70,000, depending on the make and brand. So, when Kodak questioned Avneet about the price bracket for their TVs, he said that if he had the license for the technology, he would retail them at Rs 15,000-50,000 for five models, and create a nationwide distribution.
“I think they liked the deal because it would revive the brand name,” he says.
Kodak and Super Plastronics signed a deal by mid-2016, and Avneet wasted no time in building a supply line for Kodak TVs. He also signed on Flipkart to sell the TVs.
Now, what made the difference, was the pricing. The 55-inch TV costs less than Rs 50,000, and the company has been expanding its reach across online and offline markets since August 2016. Avneesh now plans to launch in Tier II and Tier III cities soon.
For Kodak TV, Super Plastronics has a network of over 400 multi-brand distributors and dealers, and 350 service centers across India. As far as Super Plastronics’ strategy is concerned, its online presence is key, and it is currently focusing on Flipkart, Amazon and Paytm. The company did not want to disclose its investments, but sources say it has invested more than $5 million in to the venture.
According to the company, Kodak HDLED TV will see an investment of over Rs 800 crore over the next three years, and the company will soon start focusing on R&D for technology solutions in India, as it is focused on next-generation televisions.
Another TV company was born around the same time frame as Kodak’s release in India, and Delhi-based Daiwa is also looking to break the myth that the best products come at a hefty price.
Daiwa prides itself on offering state-of-the-art technology at low price points, and its products are completely designed and manufactured in India. A reason why Daiwa’s TVs are best sellers could be that they are up to 50 percent cheaper than products offered by big brands, and come with the same technology. For instance, Daiwa offers 1GB RAM, and 8GB internal memory for its TVs, which is higher than the 512 MB RAM offered by other companies in India.
So, it is two contrasting styles between Daiwa and Super Plastronics. Daiwa has to invest in technology, whereas Super Plastronics has to pay royalty or a percentage of the topline and the bottomline.
In the end, both brands end up spending a lot of money on marketing. That said, selling on Flipkart or Amazon has led them to reach a wider audience, but both brands do not give out the number of units sold.
Super Plastronics wants to double its revenues in two years, and seeks Kodak to be a major driver of that growth. Daiwa is a Rs 10-crore business as a brand, but its parent company, Videotex, is a Rs 200 crore business. Daiwa hopes to grow by at least three times next year.
“There is a market for so many brands in India. The country is brand-starved,” says Arjun Bajaj, CEO of Daiwa. The company is able to maintain low prices because its production facility is located in India. The R&D team sits in China, but all televisions are designed and manufactured in India.
With people consuming more and more content, TV revenues will only grow.
Mahesh Lingareddy, the founder of Smartron, says: “The Indian market needs original ideas and thinking. We need home-grown brands in the electronics segment; products that are designed in India and whose IP remains in India.”
So, for Kodak, it may have made the best deal in the Asian market because of a surge in content, and the growth of the TV industry. Super Plastronics seems to be showing Kodak the way forward in India, and will cash out handsomely when Kodak buys the Indian business from Super Plastronics. But that’s not on the cards right now, because Avneet has his hands full.