Videotex, a 38-year-old Indian ODM, has said that they plan to expand manufacturing capacity with a new plant that would cater to LED TVs. The company is in the final stages of setting up the unit and aims to cater to new brands and solutions, anticipating an increase in demand for smart televisions.
"We will be launching a new manufacturing facility later this year, which is currently nearing completion," said Arjun Bajaj, Director of Videotex International. "This state-of-the-art plant will be fully dedicated to the production of LED TVs. At present, we are working on finalizing the equipment, strategic planning, and procurement processes to ensure a smooth and efficient operation upon commencement."
Videotex has demonstrated significant growth and adaptation since its establishment, progressing from the production of CRT, black and white, and early-stage color TVs to the development of newer technologies such as LCD, LED, 4K smart TVs, certified webOS, and QLED 4K TVs. For the past 30 years, the company has concentrated on television production as its core business, with a particular focus on original design manufacturing (ODM).
Thoughts behind the new plant
A notable development from the company are plans to introduce new solutions and the onboarding of new customers, which has been achieved through strategic partnerships with reputed companies. As a result, it is anticipated that product volumes will increase. Despite some concerns of an economic slowdown, expectations for the coming financial year are positive, as market demand is predicted to rise.
"Over the past two years, celebrations such as Diwali (a festival season that usually sees increased sales) have not been as great, but this year, many are hoping for a better outcome," Bajaj said. "Although the sales of cooling items like air conditioners have slowed down, electronics are emerging as the next focal point for brands. As these brands perform well, so does the company in question, with its success also contingent on the quality of the solutions provided."
As a technology provider for brands, Videotex designs products that are subsequently approved and sold by the latter. The firm's performance in the market is influenced by the quality and variety of products offered. For instance, they became the official ODM of WebOS in India in 2021, securing their position as the sole official license holder in the country. Since then, they have catered to more than 15 brands, ranging from top-tier names to smaller, emerging companies.
"We offer certified solutions to the brands, from big to small that would help drive sales," Bajaj said. "This allows them to remain competitive and provide the best products which can compete with leading companies."
Open cell pricing challenges
Although the market outlook appears positive, supply chain concerns have been a major challenge for Videotex and, the industry as a whole, in the recent years. An obvious reason was the COVID-19 pandemic, but other factors have also contributed to make things difficult.
"Over the past three to four years, the supply chain has experienced significant disruptions, primarily due to the emergence of COVID-19," Bajaj said. "The pandemic has presented various challenges, including fluctuating shipping costs and volatile open cell prices, which have become major concerns. Additionally, there have been numerous other issues stemming from the pandemic, affecting both India and China, as well as the global supply chain."
The primary challenge the company faces is the instability of open cell pricing. Factors such as currency depreciation and amortization have further complicated the situation, making it difficult to accurately determine costs. When working with brands, it is crucial to account for all factors, including fluctuating exchange rates.
"For instance, the open cell price of 32-inch panels typically costs around US$30," Bajaj said. "However, it dropped to US$24 in 2020 before surging to US$110, only to fall back again to US$24. Prices have started to climb once again, with today's rate at US$32, and further increases are expected in the coming months. The 43-inch and above open cell prices have also experienced erratic fluctuations, with more increases anticipated soon."
These constant changes in open cell pricing have a significant impact on the overall cost of TVs, which is a major challenge for the industry. Unfortunately, the Indian government's recent schemes have not extended to the TV sector.
Companies like Videotex also must deal with a challenging GST system when anticipating demand. TVs above 32 inches have a 28 percent GST slab, which is not appropriate as TVs are no longer considered a luxury item. According to Bajaj, a flat 18 percent rate for all sizes could increase demand for bigger sizes in India, as customers may opt for larger sizes if they are more affordable.
Wrapping up
As the company continues to adapt to the ever-changing landscape of the TV industry, their focus is on offering cutting-edge products that meet the evolving needs of consumers.
"We are expanding our portfolio to include larger screen sizes and innovative solutions, which we will announce shortly," Bajaj said. "We plan to introduce our 75-inch TV models and unveil an entire range dedicated to high-fidelity viewing experiences. Furthermore, we are actively developing additional solutions and products for our brand partners, ensuring a robust pipeline for the future."
In short, while challenges abound, companies like Videotex are adapting by offering innovative solutions to meet changing customer demands for larger screens and advanced features. Despite problems such as fluctuating prices, the industry remains resilient and poised for growth.
