After being with LG Electronics for 10 years, KR Kim joined Videocon as its vice chairman. He has plans regarding consolidation, R&D investment and oversees expansion for the company, apart from launching a premium segment brand tentatively called "VC" brand. He also stresses that productivity, skill and process innovation are the key to world class quality. In this interview, Videocon VP, KR Kim, speaks about his plans and strategies for Videcon.
NDTV: How are you handling your shift from LG to Videocon? KR Kim: I feel it is a good opportunity and a great challenge for me. New city, new company and new goals… all of these pose a new challenge for me.
NDTV: How do you plan to make Videocon the next LG?
KR Kim: I believe we must have very simple and smart organization to achieve the quality. Efficiency is also very crucial. Good technology, know-how and skill for quality and productivity. My slogan is consolidation and control.
NDTV: When it comes to technology, Korean and Japanese companies rule the world. What would be Videocon's R&D strategy to go forward now?
KR Kim: I want to make a consolidated R&D center. The initial target is to acquire 100 engineers of global standard. This centralized R&D center will have better technology for the future. Without good technology and R&D one cannot be a global brand.
NDTV: Since you are looking for at an R&D center, global standard engineers, you must also be looking at new products. So how will you build on that?
KR Kim: Without new technology, new products cannot be introduced and cost reduction can also take place through R&D and localization of components. So R&D is the basic ground for quality, new products and cost innovation. Everything originates from R&D.
NDTV: To develop all this would take at least two to three years so how would you manage in the interim period?
KR Kim: Long term goal would take 2-3 years to achieve but immediate effect will be visible in just the next 6 months. During the short period we can innovate many things like process, material and quality. So many things can get improved.
NDTV: When you are talking about innovation then developing new products would be a key goal for you?
KR Kim: Productivity, skill and process innovation would help us attain quality so that we can make good cost innovation leading to increase in profit.
NDTV: Which are the new categories you are looking at to expand the Videocon portfolio?
KR Kim: I think there is a lot of scope in GSM mobile phones. In the beginning we may have to outsource as we don't have a factory. But after one year of successful introduction in the Indian market, we will check the possibility of setting up our factory in India with a good R&D. In case of mobile phones also we need good R&D especially for software. For that we will recruit good software engineers from abroad who will provide guidance. As you know India has good capability for software. So some day we might even beat Nokia.
NDTV: So is mobile handsets the only area you are looking at or you plan to venture into other categories like PCs as well?
KR Kim: We are looking at notebook PCs and LCD monitors. We can also move to LCD panel manufacturing for both notebook PCs and LCD monitors. This way we can also look at some form of vertical integration.
NDTV: Incase of mobile handsets, do you plan to outsource it from China?
KR Kim: We would outsource mainly from Taiwan.
NDTV: Videocon advertises itself as the Indian multinational because it has bases in many parts of the world. You have also brought in a large amount of experience from your LG stint by working in different countries. So where do you grow now internationally?
KR Kim: At this stage Videocon's major revenue comes from domestic operation but we are looking at increasing the share of revenues from overseas. The ratio should be 1:1. global market is a big opportunity. We have about 10 overseas branch offices currently and I am sure within 3 years we would have more than 20 branch offices.
NDTV: Are there any markets that you have identified?
KR Kim: We will focus on middle-east and African markets especially Dubai and Nigeria. These would be the base camps for their respective regions. Apart from these, Latin American market, particularly the Panama region, also offers good scope. By the end of this year I also plan to make a foray into the Mexican markets. Videocon already has an office there so I am thinking of making it the base camp.
NDTV: When you expand further, would you establish manufacturing bases in countries like Mexico or would you ship from India?
KR Kim: This would depend on the regulations of those countries and the tax benefits they offer.
NDTV: What are your consolidation plans for India?
KR Kim: Firstly, physical consolidation. At this point, Videocon has different offices for its various brands in different cities of India and in each office there is separate accounting division, HR division, logistic division to handle each brand. So they are functioning as absolutely different companies. This results in huge inefficiencies. There is also no unified strategy. So I want each city to just have one office and one branch manager who will take decisions regarding brands and dealers. Secondly, we can also reduce manpower by almost 50 per cent. Also we will have clear targets and goals.
NDTV: So will all the brands exist or all products will exist under Videocon only?
KR Kim: Before making a final decision, we want to see which brand will survive and disappear over the next one year. The market would identify that.
NDTV: Do you think the market has already identified that? There are some brands within Videocon umbrella that are not doing that well compared to others.
KR Kim: Within the next 6 months to one year we would like to gauge this aspect. Since we plan to make one branch manager responsible for all brands under one product category, it would be easier for us to identify.
NDTV: Everybody in the industry, today, is complaining of margin pressures due to rising input costs and competition from organized retail. So how would you manage these different pulls and pressures?
KR Kim: I have found out that Videocon can improve its productivity in factories and efficiency in marketing by 30 per cent. For instance, in cities like Mumbai and Delhi they have 20 service of franchise and this is not very efficient way to function. The more the service of francise, lesser the owner of the service gets as revenue. In logistics also, there is room for improvement. Videocon has so many godowns and warehouses which we would have to consolidate to boost efficiencies.
NDTV: One way to tackle margin pressures is to revise the pricing of your products. Would you revise your prices very soon?
KR Kim: Yes we might have to hike our prices but only to a minimum level. Instead we would focus on improving our efficiencies and productivity in a big way so that our prices remain competitive in the market.
NDTV: So are you talking of a price revision of 5-10 per cent across the board?
KR Kim: Yes that is a possibility. In fact we are seriously contemplating to what extent we would increase our product prices.
NDTV: The premium category of product ranges are often the revenue generators for the company. Videocon lacks in this segment. So are you planning to make a foray in this category as well?
KR Kim: We are contemplating a new premium brand may be a premium VC brand of a new product. The new product would be possible only if there is strong quality control and R&D support.
NDTV: Would the new products mean LCD, plasma TVs or absolutely new categories all together?
KR Kim: They might not be completely new products. They would most probably be existing products with better features and quality.
NDTV: So what will be the difference in price of your existing products and your premium VC brand?
KR Kim: We are assuming a 10-15% price difference.
NDTV: Will it have an independent sales, distribution and marketing model?
KR Kim: Yes there will be limited dealers for the product.
NDTV: Will you take this product to the oversees markets also that you are planning to tap?
KR Kim: Yes definitely and they should be of global standards and superior quality. They will be high-end products.
NDTV: When LG came to India, it went for big advertising campaigns, will you also do the same with Videocon now?
KR Kim: LG's case was different. It was a new to india whereas Videcon has been in India for a 30 years. So the strategies would be different. First, we are aiming for much better quality and R&D investment and only after that we would decide on marketing techniques.