Company: Videocon Industries Ltd

History

Company History

Videocon Industries Ltd offers range of products in televisions, washing machines, air-
conditioners, refrigerators, audio products, home theatre systems and microwave ovens. The
company operates in four segments: Consumer Electronics and Home Appliances, Crude Oil and
Natural Gas, Telecommunications, and Power.

The company is engaged in manufacture, assemble and distribute a range of consumer electronics,
products and home appliances, including finished goods, such as television, home entertainment
systems, refrigerators, washing machines, air conditioners and other small household appliances
and components, such as glass shell, compressors and motors.

The company has interests in exploration production in Brazil, Mozambique, East Timor,
Indonesia and Australia. The Company is developing the Pipavav power project through a wholly
owned subsidiary Pipavav Energy Pvt Ltd. The company operates the global system for mobile
communications mobile services through Videocon Telecommunications Ltd.

Videocon Industries Ltd was incorporated in the year 1986 with the name Adhigam Trading
Private Ltd. The company was established for the business of trading in paper tubes. In the year
1987, the company introduced Black & White TV, Color TV and Washing Machines. In
September 1988, the company decided to diversify in the business of lease financing, hire purchase
and investment activities. The home entertainment systems, electronic motors and air conditioners
were partaken under Videocon during the year 1989-1990.

During the year 1990-91, the management of the company underwent a change by way of transfer
of equity shares to the Videocon Group. They had outfitted the refrigerators and coolers in the
period of 1991. In February 14, 1991, the company changed their name from Adhigam Trading
Pvt Ltd to Videocon Leasing & Industrial Finance Ltd.

In the year 1995, the company made their footprint in glass shells for CRT segment. In the year
1996, the company diversifies into oil sector. In the year 1998, the company formulated and
released compressors and compressor motors. In the year 2000, the company acquired Philips color
TV plant.

In the year 2004, Petrocon India Ltd was amalgamated with the company with effect from March
31, 2004. Thus, the company got into oil and gas business. With merger of Petrocon, the company
became a member of the consortium that operates the Ravva Oil and Gas fields. Also, the company
changed their name from Videocon Leasing & Industrial Finance Ltd to Videocon Industries Ltd.
In June 15, 2004, Videocon Securities Ltd became a subsidiary of the company.
In the year 2005, the company acquired three plants of Electrolux India. Also, they acquired the
Thomson Color Picture Tube and Hyundai Electronics. In December 2005, Eagle Corporation Ltd
became a wholly owned subsidiary of the company. In July 21, 2006, EKL Appliances Ltd
(formerly known as Electrolux Kelvinator Ltd) merged with the company.

In February 2007, , US telecom giant Verizon had tie up with the company to offer international
long-distance (ILD) services in India. In November 2007, the company acquired Planet M for Rs
2 billion. Planet M is the music and entertainment retail arm of media house Bennett, Coleman &
Company.

During the year 2007-08, the company through one of their subsidiaries executed Licence
Agreements with the Department of Telecommunications (the DOT) wherein the company was
granted the licence to provide unified access services on Pan India basis. In September 8, 2007,
the company, jointly with Bharat Petroleum Corporation Ltd, signed an agreement with EnCana
Corporation and 749739 Alberta Ltd for buying its stake in IBV Brasil Petr'leo Limitada (formerly
EnCana Brasil Petr'leo Limitada) which had participating interests in four deep water Brazilian
Exploration Concession Areas, namely, Campos, Espirito Santos, Sergipe Alagoas and Potiguar
Basin encompassing ten (10) different exploration blocks. The company also acquired 10%
participating interest in Rovuma Offshore Area 1 Block in Mozambique from Anadarko Petroleum
Corporation, USA.

During the year, Videocon International Electronics Ltd, Videocon Global Energy Holdings Ltd,
Videocon Energy Resources Ltd, Pipavav Energy Private Ltd, Videocon Electronic (Shenzen) Ltd,
Eagle Ecorp Ltd and Videocon Energy Ventures Ltd became subsidiaries of the company. Further,
Eagle Corporation Ltd ceased to be subsidiary of the company due to dilution and consequently
all the subsidiaries of Eagle Corporation Ltd ceased to be step down subsidiaries of the company.
The company together with their subsidiary, Videocon International Electronics Ltd acquired 64%
interest in Datacom Solutions Pvt Ltd.

During the year 2008-09, Videocon Indonesia Nunukan Inc., Senior Consulting Pvt Ltd and Jumbo
Techno Services Pvt Ltd became subsidiaries of the company whereas Videocon (Mauritius)
Infrastructure Ventures Ltd and consequently Investcon SingaporeHoldings Ltd ceased to be the
subsidiaries of the company.

During the year 2009-10, Chhattisgarh Power Ventures Pvt Ltd, Triumph Energy Pvt Ltd,
Videocon Energy Ltd, Videocon Hydrocarbon Holdings Ltd and Senator Energy Pvt Ltd became
the wholly-owned subsidiaries of the company. Videocon Oil Ventures Ltd, Videocon Power
Ventures Ltd, Marvel Energy Pvt Ltd, Aim Energy Pvt Ltd, Viable Energy Pvt Ltd, Vital Power
Pvt Ltd, Proficient Energy Pvt Ltd, Orchid Energy Pvt Ltd, Applied Energy Pvt Ltd, Instant Energy
Pvt Ltd, Comet Power Pvt Ltd, Unity Power PvtLtd, Percept Energy Pvt Ltd, Galaxy Power Pvt
Ltd, Videocon Australia WA-388-P Ltd, Oil Services International S.A.S, Videocon Energy Brazil
Ltd, Videocon Indonesia Nunukan Inc, Videocon Mozambique Rovuma 1 Ltd (formerly known
as Videocon Energy Resources Ltd) and Videocon JPDA 06-103 Ltd (formerly known as Global
Energy Inc) became the step down subsidiaries of the company.
During the year, Godavari Consumer Electronics Appliances Pvt Ltd, Mayur Household
Electronics Appliances Pvt Ltd, Sky Billion Trading Ltd, Paramount Global Ltd, Powerking
Corporation Ltd and Venus Corporation Limited ceased to be the subsidiaries of the company and
Videocon Display Research Company Ltd got voluntarily liquidated.

In November 3, 2011, Sesa Goa Ltd signed the definitive share purchase agreement with the
company along with other shareholders of GEPL under which Sesa agreed to acquire 100% of the
outstanding common shares of GEPL for the enterprise value of Rs 101 crore on cash free debt
free basis including normative working capital of Rs 2.75 crore.
Ratio Analysis

Ratio analysis is the process of examining and comparing financial information by calculating
meaningful financial statement figure percentages instead of comparing line items from each
financial statement.

The various ratios that are evaluated are as follows:

 Liquidity
 Financial leverage
 Profitability (sales)
 Profitability (Total investment)
 Profitability (Equity funds)
 Turnover

COMMENTS:

1. Liquidity Ratio- The current ratio, quick ratio and cash ratio greater in the year 2015 as
compared to 2014 and 2016. So, from all the three ratios it can be observed that the
liquidity of the company has been reduced with respect to the previous years.

2. Financial Leverage Ratio- The debt-equity ratio and debt-total asset ratio has is the
same of the year 2015 and 2016 2.34,2.31 which is more than in the year 2014(2.27)
which indicates that the higher proportion of company’s debt or equity is used to finance
company’s assets. But the other 3 ratios have decreased by huge margin because the
operating profit of company has decreased in the last year and loss is acquired after the
deduction of interest and tax.

3. Profitability Ratio- It can be observed that the overall profitability has tremendously
reduced in FY 2016 because of the increase in total expenditure with respect to that of the
total income which leads the company to acquire loses in the year 2016..

4. Turnover Ratio- The inventory holding period of the company is decreasing consistently
which indicates the sale of the company is increasing. Also the average receivables that
are to be incurred by the company are decreasing and the receivable period is increasing
which indicates that the performance of the company is getting deteriorating. The total
asset turnover ratio is the highest in 2015 as compared to Fy 2014 and FY 2016.
Interpretation:

 We can say that the Current Ratio of Videocon is in Fluctuating trend. The
highest current ratio of Videocon was 7.10 in the year 2014-15 which shows
good position of the company and the lowest ratio was 6.24 in 2013-2014.
Overall performance of current ratio shows that company position is good.
 It can be said that the overall performance of absolute liquid ratio shows that
company position is not in a good position.
 The highest debtor’s turnover ratio of Videocon was 4.45 in the year 2014-15
and the lowest debtor’s turnover ratio was 4.36,3.47 in 2013-14 and 2015-16.
 We can say that debtor’s turnover ratio was in fluctuating trend. The overall
performance of the debtor’s turnover ratio was excellent.
 We can say that the ratio is in decreasing trend.
 The company position is not good at all.
 The highest net profit ratio of Videocon was 0.02 in the year 2014-15 and the
lowest net profit ratio is -0.45 in 2015-16. This ratio is also in decreasing trend.
Net profit of the company is goes down, so it is not good for the company.
 So, it can be observed that the overall performance of the company is
deteriorating in the year 2016.