Company Report &

Industry Analysis
Jayant Kushwaha
Roll No: 141119
Division: A
Batch: MBA (FT)
2014-16

Institute of Management, Nirma University

Date of Submission: 03/04/2015

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Company Report & Industry Analysis

IFB Industries Ltd.

IFB Industries Limited originally known as Indian Fine Blanks Limited started their operations
in India during 1974 in collaboration with Hienrich Schmid AG of Switzerland. The product
range includes Fine Blanked components, tools and related machine tools like Straighteners,
Decoilers, Strip loaders and others.
The Engineering divisions are located at Kolkata & Bangalore. The Bangalore unit, apart from
Fine Blanked components, manufactures motors for White goods as well as Automotive
applications.
IFB is into Electronics/Home Appliance industry, Agro Industry, Automotive Industry and
also Travels and Tourism industry where it has recently made an inception.

Introduction
IFB Industries Ltd is an India-based company. The company is engaged in manufacturing and
marketing engineering products. They operate in three segments, namely engineering,
home appliance and others. The engineering divisions are located at Kolkata and Bangalore.
The company's product range includes fine blanked components, tools and related
machines tools, such straighteners, decoilers, strip loaders and others. They also provide
household appliances, including washing machines, dryers, microwave ovens, and
dishwashers. In addition, they manufacture motors for white goods and automotive
applications. IFB Industries Ltd was incorporated in the year 1974 as Indian Fine Blanks Ltd
in collaboration with Hienrich Schmid AG of Switzerland. The company was established with
the objective of manufacturing fine blanking tools press tools and fine blanked components
used in a wide range of precision engineering industries. In the year 1985, the company took
4.84 acres of land on lease at Gangarampur in West Bengal for the manufacture of high
technology machines as well as for future expansion-cum-diversification programmes. In the
year 1988, the company set up a new division, namely Project and Construction division to
take up projects abroad as well as in India. In addition, the company in association with P. A.
Rentrop Hubert and Wagner GmbH & Co KG West Germany set up a joint venture company
called RHW India Pvt Ltd in India for the manufacture of automatic seat adjustment
mechanism. In the year 1989, the company entered into collaboration with Bosch-Siemens
Hausgerate GmbH, Germany for production of fully automatic washing machines and for the
manufacture of the state-of-the-art domestic appliances. The company changed their name
from Indian Fine Blank Ltd to IFB Industries Ltd with effect from July 19, 1989. The company
set up a company called European Fine Blanking Ltd at Wrexham in North Wales, UK with
their European partners for the manufacture of fine blanking tools and components for the
UK and other European markets. In the same year, RHW India Pvt Ltd became subsidiary of
the company and the name was changed to RHW India Ltd. RHW India Ltd entered in a joint
venture agreement with Electrolux Autoliv AB (Sweden) for setting up a joint venture

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Company Report & Industry Analysis

company for the manufacture sale and export of automotive safety belts and accessories. In
the year 2000, the company launched their new fully automatic washing machine Senator in
the Kerala market. During the year 2002-03, the company launched a highly sophisticated
washing machine 'IFB Digital' with advanced features in line with the latest international
models. In addition, they introduced a new range of Microwave Ovens. The company added
250 Nos of retail outlets in different parts of the country. During the year 2003-04, the
company launched the new model washing machines 'Elena' and new model dryer 'Easy
Drier'. In addition, the engineering factories at Kolkata & Bangalore have been certified as
QS9000 by DNV. During the year 2005-06, the company launched the new economy model
washing machine 'DIVA' and high-end model DIGITAL 7 kg. During the year 2006-07, the
company introduced two new models of microwave ovens and started souring of industrial
dishwasher. During the year 2007-08, they introduced Top loaders and one new model
microwave oven.
The Home Appliances Division was started in 1991 with the vision to revolutionise the way
Indians live. Over two decades, we have grown in strength to become a word synonymous
with home solutions. Through a constant evolution of the very best Washing Machines,
100% Clothes Dryers, Dishwashers, Microwave Ovens, Air Conditioners, Refrigerators,
Cooker Hoods and Modular Kitchens, we have helped usher in a lifestyle of convenience and
freedom. Today, millions of Indian households use IFB products, making us one of the most
trusted home appliances brands in the country. Our service network of 250 franchises and
2,200 service engineers ensures we deliver exceptional service across the country.

Vision
To be customers first choice

Mission
1. To maximise shareholders value & growth by manufacturing & marketing top
quality products.
2. To be the best in the eyes of our customers, employees, business partners &
shareholders.
3. To be in every home valued at 15 lacs+ and achieve the target of 4,000
crores turnover by 2016-17.

For our customers: To offer them the best product to buy, an innovative product
that constantly outperforms peers & outstanding service that makes every
customer smile.
For our employees: to provide them an environment in which every individual
learns, grows and prospers.

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Company Report & Industry Analysis

For our Business Partners: To enable them to consider IFBs products & services
as their first choice.
For our Investors: The company should be acknowledged as the one with the
highest degree of corporate transparency that delivers on the promises given to
its shareholders.

Values
1. Never let profit centric conflicts get in the way of doing what is right for the
customers.
2. Gove customers a good fair deal. Great customer relationships take time. Do not try
to maximize short term profits at the expense of building those relationships.
3. Always look for ways to make it easier to do business with us.
4. Communicate daily with your customers. If they (customers) are talking to you, they
cant be talking tp a competitor.
5. Dont forget to say thank you.
6. Leaner is better
7. Eliminate bureaucracy
8. Cut waste relentlessly
9. Operations should be fast and simple.
10. Value each others time
11. Invest in infrastructure.

IFB Quality Policy

To supply products that will exceed customer's expectation due to excellence through
perfection in quality and service.
To maintain an environment for teamwork and continuous improvement, leading to total
quality in all activities of the organisation.

Quality Assurance
The Bangalore and Kolkata works are certified for ISO 9001 & QS 9000 by TUV SDI.
Bangalore unit has been certified for TS 16949 by TUV SDI.
Modern Quality Control facilities are available which includes FERRANTI 3 Co-ordinate
Measuring Machine, ZWICK Micro Hardness Tester & Micro height Tester, Metalography
Microscope & others.

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Company Report & Industry Analysis

Research & Development

IFB has a research and development centre equipped with high-end softwares like Solid
modelling, CATIA, FEA and Mold Flow for the design and analysis of various products.
Besides it also has highly skilled and experienced tool designers designing fine blanking parts
and tools to international standards.

Customers
The companys customers include Maruti Udyog, Ford India, Fiat India, Toyota Kirloskar
Motors, Lucas TVS, Brakes India, Autoliv India, Rane TRW, IFB Automotive, Germanys
Takata Petri, BorgWarner, Avtec and Bosch chasis.
The companys international business division has become a recognized Export House
dealing in not only IFB's own products but also third-party exports.

Subsidiaries
IFB, in collaboration with Germanys RHW and Swedens Electrolux, has two joint venture
subsidiaries -- RHW India and RHW Autoliv India -- to manufacture automotive seat recliners
or seating systems and safety equipments.

Strengthening its reach in tier 2 and tier 3 towns

IFB is strengthening its distribution network in tier 2 and tier 3 towns and focusing on
marketing programmes for semi-urban and rural markets. The company has a 24-hour telehelpline service for queries. It delivers to over 1,600 locations in India.

Latest Development
The Committee of Directors of IFB Industries had recently allotted 68,00,000 equity shares
of Rs 10 (at par) to IFB Automotive, a promoter group company. The promoters brought in
above fund in line with the direction of Board for Industrial and Financial Reconstruction
(BIFR) in the sanctioned scheme.

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Company Report & Industry Analysis

Consumer Durables Industry

Consumer durables refer to those goods that do not quickly wear out and yields utility over
a long period of time. Indian consumer durables industry has become one of the fastest
growing sectors in India, primarily driven by growing Indian economy. With the
uninterrupted inflow of disposable incomes and the development of product technology,
the demand for the diverse consumer durable goods are growing. Indian consumer market
is extremely competitive and fragmented and mainly dominated by international players
(MNCs), representing around 65 percent share due to their superior product as well as
technological advancement. Further, LG and Samsung together account for over 40 percent
of the consumer durables market in India. Consumer durables products are divided into the
three categories such as white goods, brown goods and consumer electronics with key
products such as televisions, refrigerators, air conditioners and washing machines. Present
market size of the industry stands at around $10 billion. 100 percent foreign direct
investment (FDI) in electronics hardware-manufacturing sector is allowed under the
automatic route.

Overview
India is expected to become the fifth largest consumer durables market in the world by
2025. Also, the consumer electronics market is expected to increase to US$ 400 billion,
while production could reach US$ 104 billion by 2016.
The expected market size of consumer durables in India by 2015 is US$ 12.5 billion. Urban
markets account for about 65 per cent of total revenues in the consumer durables sector in
the country. The rural and semi-urban markets are likely to contribute a majority of
consumer sales as the rural consumer durables market is growing at the compound annual
growth rate (CAGR) of 25 per cent.

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Company Report & Industry Analysis

The Government of India has increased liberalisation which has favoured foreign direct
investments (FDI). Also, policies such as National Electronics Mission and digitisation of
television and setting up of Electronic Hardware Technology Parks (EHTPs) is expected to
boost the growth of this sector. This growth will be further supplemented by the reduction
in Central Excise Duty from 12 per cent to 10 per cent.
The consumer durables market is anticipated to expand at a CAGR of 14.8 per cent to US$
12.5 billion in FY15. Also, the demand from rural and semi-urban areas is projected to
expand at a CAGR of 25 per cent to US$ 6.4 billion in FY15, with rural and semi-urban
markets likely contributing majorly to consumer durables sales.

Key Categories
The Indian Consumer Durables industry can be segmented into 3 groups namely white
goods, brown goods & consumer electronics.

Consumer
Durables
White
Goods

Brown
Goods

White Goods

Brown Goods

Refrigerators
Air Conditioners
Washing
Machines
Watches & Clocks
Cleaning
Equipements
Other Domestic
Appliances

Microwave Ovens
Cooking Products
Chimneys
Mixers &
Grinders
Electronic Fans
Irons

Consumer
Electronics
Consumer
Electronics
TVs (CRT, LCDs &
LEDs)
Mobile Phones
Audio & Video
Systems
Digital Cameras
DVDs & Camcorders
Personal Computers

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Company Report & Industry Analysis

Trends favouring growth of Consumer Durables Industry

Revival in economic growth to provide impetus to sector

Consumer durables industry is highly correlated to economic scenario as the industry
demand is largely depended upon disposable income. After registering an average growth
rate of 8 percent during FY08-FY12, Indian economic growth had slowed down to below 5
percent over the last two financial years. The factors like high interest rate and stubborn
inflation, low investments and slow execution of infrastructure projects have impacted
country's economy growth. However, Indian economy has shown signs of nascent
recovery and grew by 5.5 percent during the first half (April-September) of FY15 as
compared to 4.9 percent in the same period in FY14. Improved sentiments, the renewed
policy thrust by new government and a pickup in consumer demand are likely to provide
impetus to sector in the coming future. With the gradually growing domestic economy,
per capita income of people in India grew by a CAGR of 10 percent to $1570 in 2013 from
$740 in 2005. Household income in the top 20 boom cities in India is expected to grow at
around 10 percent annually over the next ten years, which is likely to increase consumer
spending on durables products.

(Source: World Bank data)

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Company Report & Industry Analysis

Increasing share of organised retail

The demand of consumer durables products are growing at brisk pace in urban as well as
rural markets and one of the key enablers of this growth has been the increasing
penetration of organised retail. Though, there are established distribution networks in
both rural and urban India, the presence of well-known brands and organized sector is
increasing. Unorganized retailers dominated consumer durables segment and the
penetration of modern retail is around 12 percent in consumer durables segment. This
scenario is, however, changing as huge growth potential is attracting large corporate
organisations to expand their retail operations into this territory. Furthermore, shopping
malls are becoming more common in domestic cities, and according to plans announced by
key developers of the country, large number of new malls is expected over the next few
years.
Going forward, the market share of organized retail is expected to rise at fast pace.
Modern retail stores across the country include Reliance Digital, Ezone and Croma are
increasing their presence in the country. These three big retails have presently over 200
stores with around 80-90 percent located in cities with population over that 1 million.
Further, orgainised retailers are also using E-commerce to expand their business. With the
increase in organized shopping malls, Indian customers will have a far larger number of
attractive, comfortable, brand-conscious outlets in which to shop. This will have a positive
impact on the consumer durables industry, as organised retailing would not only
streamline the supply chain, but also facilitate increased demand, especially for high-end
and branded products.

Rural Markets offer a big opportunity

Although, over 60 percent of the country's population resides in rural India, it represents
only 35 percent of the total domestic sale. India is still an urban centric market with around
two-thirds of the total domestic demand of the consumer appliances triggered by the top
40 cities of the country. However, the ratio of demand is transforming on the back of
growing demand in rural markets. Growing rural income with higher non-farm income,
increasing availability of power, rising product awareness through advertising and
customized products for rural consumers are the major factors for such a tremendous
change in the purchasing power of the rural customers. Lower penetration of durables in
rural market is also generating huge demand for first time buyers in that market which is a
big opportunity of durables manufactures. Rural Consumer durables market is growing by
average annual growth rate of around 30 percent and thus the manufactures are also
increasing their distribution networks to rural towns so that they can tap these markets as
well. Furthermore, various companies are coming up with customized products which suits
for rural demand. Rural consumer durables market is expected to post much faster growth
than the urban markets in future and its share is expected to reach near 45 percent in near
future.

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Company Report & Industry Analysis

Government's favourable initiatives

In order to boost the domestic consumer durables sector, the government of India (GoI)
has taken various initiatives like easing duty rate and providing more benefits under the
EPCG, EHTP schemes. Excise duty for manufactures reduced to 12 percent and basic
customs duty on important products as well as key raw materials eased to 10 percent.
Further, excise duty has been reduced to 6 percent on LED lamps and LEDs required for
manufacture of such lamps. 100 percent FDI is permitted in electronics hardwaremanufacturing through automatic route. Under Electronic Hardware Technological Park
(EHTP) scheme, the government increased the number of incentives such as duty waivers
and tax incentives to companies which replace certain imports with local manufacturing.
Furthermore, Export Promotion Capital Goods (EPCG) allows import of capital goods on
paying 3 percent customs duty.

Issues and Concerns

Increasing Competition: The consumer durable market has been transformed by the entry
of over a dozen new brands and thus the competition among players has
intensified. Growing competition among players has forced them to spend more on
advertisement and also lessen their pricing power, thereby lowering industry margins.
Need of large investment in technology: Consumer durables products are required to
undergo persistent changes to meet the varying demand of consumers due to the
continuous change in the psychographic and demographic profile of the customer. Thus,
the firms would continue to rely heavily on advancement in technology. Furthermore,
major raw materials such as metals are exhibiting increasing trend over the past few years
posing margin pressures.
Poor rural distribution: As around 65 percent of India's population still lives in rural areas,
availability of products to rural village located in remote area is difficult due to inadequate
infrastructure and poor road connectivity.
Inadequate power supply: India is still power deficit county and has been witnessing peak
hour power deficit at around 3-5 percent with the southern India remaining the most
affected region registering a peak power deficit of 8-10 percent. Therefore, the sector's
growth is impacted by the inadequate infrastructure of the country as regular power
supply is imperative for any consumer electronics products, which depends majorly on
power.

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Company Report & Industry Analysis

Consumer Electronics market in India

Overview
Indian Consumer Electronics market has been witnessing sustained double digit growth rate
in the past few years. Increasing product awareness, affordable pricing, innovative products
and the high disposable incomes have aided in the strong growth in the consumer
electronics market in India. Rapidly shrinking replacement cycle for consumer durables is
observed as sustaining demand in urban India. The existing low penetration rates and the
increasing usage of consumer durables have catapulted rural India to the high demand
generating segment. The consumer electronics market in India is characterized by
technological advancements, innovative product introductions, price fluctuations and
intense competition.

Penetration levels

CTVs (Color televisions)

Indian television market is highly under penetrated compared to China, developed
countries and world average.

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Company Report & Industry Analysis

Set top boxes

The set-top box (STB) market is growing rapidly, due to the expansion of DTH
and introduction of digitalisation of Cable TV networks in metros & tier II cities.
The DTH market was worth USD 2.2 billion in FY13; the subscriber base
reached 51 million from 23 million during 2010-13, subscriber base is expected
to reach 200 million by 2018, thereby making India one of the worlds largest
DTH markets. Evaluating the present market scenario, around 80% of the total
cable TV subscribers are still on analog based networks, which is expected to
be covered under the 3rd and 4th phase of digitalization.

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Company Report & Industry Analysis

SWOT analysis of the Consumer electronics sector in India:Strengths

Weaknesses

Opportunities

Threats

Presence of
established
distribution networks
in both urban and
rural areas.

Demand is seasonal
and high during
festive season.

In India, penetration
level of white goods is
lower as compared to
other developing
countries.

High import duties on

raw materials.

Presence of wellknown brands.

Demand is dependent
on good monsoons.

Unexploited rural
market.

Cheap imports from

ASEAN at 0% or
concessional import
Duty & imports from
China

Home appliances
Overview
Demand in urban markets is likely to increase for products such as LED TVs, laptops, split
ACs and, beauty and wellness products. In rural markets, durables like refrigerators as well
as other home appliances are likely to witness growing demand in the coming years. The
rural market has recently experienced around 30 per cent growth rate in demand for
electronics and home appliances. Urban growth is likely to be driven by new
technology/innovative products, lifestyle products and replacement demand.

Penetration levels
Refrigerator has the highest penetration in India of 31%.

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Company Report & Industry Analysis

Air Conditioners
The Indian AC market accounted for sales of 3.6 million units in 2013. ACs are perceived as
high-end products; current penetration stands at 6.8 per cent including Window and Split
AC. The segment had a 13.0 per cent share (2013) in the consumer appliances market. High
income growth and rising demand for split ACs are the key growth drivers. The room airconditioning market represents approximately 50% of the total market, with the other 50%
comprised of central and specialist air-conditioning systems. The room AC market can again
be divided into two sub-segments. On the one hand the residential segment which now
constitutes a majority 60% market share and on the other hand the commercial segment
which represents a smaller 40%.

Market sizes and growth rates

Washing machines
Washing machines are the second largest contributor to the consumer appliances market
(after refrigerators); in FY 2013 total sales was around 7.5 million units. Fully automatic
washing machines are garnering an increasing share of the market due to reduction in prices
and higher disposable incomes. LG Electronics continued to be the leading player in home
laundry appliances in India with a share of 25% in 2013, followed closely by Samsung
Electronics (23.2%). The major chunk of this growth is expected to be driven by newer
households purchasing washing machines, as well as a greater number of households
replacing their semi-automatic washing machines with fully automatic washing machines. 69.9 Kg is the most popular category in India with 72.2% share in the total sales.

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Company Report & Industry Analysis

Microwave ovens
Due to the convenience of mobility and ease of operation, freestanding microwaves
continue to dominate the Indian market in 2013, accounting for almost all volume sales. LG
Electronics continued to be the market leader in 2013 with a volume share of 32%. Samsung
Electronics ranked second with a 22% share followed by Whirlpool with just over 11% and
Bajaj Electricals with 10%.

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Company Report & Industry Analysis

Refrigerators
Refrigerator sales stood at ~14.0 million units in 2013. This segment makes up 18.0 per cent
of the consumer appliances market. The market share of direct cool and frost free segment
is 76.3 per cent and 23.7 per cent respectively. Key growth drivers are lower prices and
rising demand for frost-free refrigerators. Fridges with a capacity range of 142-340 litres
dominated fridge sales over the review period, representing 74% of total volume sales. In
fact, the 165-litre fridge was the standard in almost all households until the arrival of
competition and the need to differentiate, coupled with economic development, which led
to the development of higher capacities. Over the review period, fridges with 341-540-litre
capacities continued to gain momentum to account for 20% of total fridge volume sales in
2013. Market share of LG is 24.50% and Samsung is 20.60% in 2013.

SWOT analysis of the Consumer home appliances sector in India

Strengths

Weaknesses

Opportunities

Threats

In recent years,
Poor government
organized sector
spending on
has increased its
infrastructure.
share in the market
vis a vis the
unorganized sector.

Rapid urbanization

cheaper imports
from China &
Concessional duty
imports under FTA
from ASEAN
Countries are
forcing threat to
local manufacturing

Easy availability of
finance.

Increase in income
levels, i.e. increase
in purchasing
power of
consumers

Poor infrastructure;
Non-Availability of
regular power
supply, which is
imperative for
consumer
electronics product

Low purchasing
power of
consumers.