Mirc Electronics, the maker of popular household electronic goods under the Onida brand, is looking to get into strategic alliances and eyeing 20 percent turnover from non-captive manufacturing in FY19.
In an interaction with Moneycontrol, Vijay Mansukhani, Managing Director, Mirc Electronics, said that the company has been approached by peers for strategic alliances on manufacturing.
“We are open to having a step-down company where we will hold 30 percent stake with no additional investment. Interested partners can hold the rest of the stake in the company. We will help them in reaching the market through our distribution reach and they can also use our manufacturing facilities at a cost,” he added. This, he added, will bear more fruit money-wise for the company.
Non-captive manufacturing to push revenues
In this financial year, Mansukhani said that Onida is looking to have 20 percent of turnover from non-captive manufacturing. This would mean that the company’s manufacturing facility could be used for other companies who do not own such units.. The company had total income of Rs 191.73 crore in the March quarter and Rs 741 crore for FY18.
Mansukhani added that these numbers (from non-captive) will rise further when the volumes pick up from these manufacturing units.
In the March quarter, the company saw a dip in its net profit to Rs 4.01 crore YoY from to Rs 14.06 crore. Mansukhani added that the for the full year, however, they saw the company post profit of Rs 23.49 crore compared to a loss of Rs 19.24 crore in FY17.
“There are brands which have approached us to help them use our manufacturing facility. We will be exploring these options,” he added.
Pricing pressures due to crude oil, GST
The impact of the rising oil prices as well as depreciating rupee will lead to an increase in prices by 3-4 percent. “We have no choice but to increase prices. We are now looking at how to do it,” he added.
The brand which kept a low-profile in the consumer appliances space has now entered this segment aggressively. Through their televisions, washing machines, microwaves and air conditioners, Onida is looking to deepen its penetration in the Indian market.
The goods and services tax (GST) which has been fixed at 28 percent and over that is customs duty of 10 percent. Mansukhani added that this takes the effective rate of tax to 40 percent, compared to the 9 percent tax in regions like China.
“We are lobbying aggressively to get the GST for consumer durables to be reduced to 18 percent. If that is done, the general public will benefit from the lower rates,” he added.
Washing machines revenues to jump
Among the segments, Mansukhani said that they expect to post a 100 percent growth in revenues from washing machines. The air-conditioner segment, he explained, was hit by the new energy ratings from the Bureau of Energy Efficiency (BEE) that came into force from January 2018. With this, a five-star rated air-conditioner was re-rated as three star one from January 2018 onwards.
New branding strategy
The company is also looking to make changes in its branding strategy by looking at multi-platform advertising to ensure that they reach the target audience across generations.
‘The Devil’, which was a character often used in the Onida advertisements of the 1980s and 1990s has been recently brought back. Mansukhani added that they would want ‘The Devil’ to be recognised as their brand ambassador.
He explained that they would look at the platforms where the youth is present and the shows they watch and accordingly provide targeted advertising for them.
“In rural areas too, it is not just sales that is the focus. We are also looking at the after-sales service which would be the real differentiator for the brand,” he signed off.