Cutting-edge makeover at Panasonic India

India is a perfect case where the need for bare necessities is transitioning to want for comforts and luxuries. With a booming economy fuelled by growing purchasing power, the country’s milieu has not only nurtured a market for new-age products, but an upsurge in demand for the latter, which has ensured that global developers and manufacturers discover capabilities such that they cater to the bespoke needs of India.

Japanese electronics giant Panasonic, which is diversifying as an enterprise solutions and technology provider, is a good example reflecting India’s market change.

Early days

Panasonic arrived in India in 1972, setting up a manufacturing centre for dry cells. In the early 1990s, the company established a wholly-owned subsidiary Panasonic Sales India Limited (PSIL), opening facilities for televisions, audio systems, ACs, and washing machines.

This was the time when the Indian market had just opened up, welcoming container loads of must-haves that were coveted by a growing middle-class. Along with leading Indian electronics brands, several foreign players predominantly from Japan and South Korea, began to reap the Indian opportunity. However, Panasonic began to change its strategy and approach to the market.

Relating the company’s early days in the country, Panasonic India President and Chief Executive Officer Manish Sharma says, “Between 2002 and 2008, we were not very active in the country due to multiple reasons. There was a significant gap between the portfolio which existed within the corporation, and where the country stood at that time in terms of consumer base. For instance, we were making split ACs, and globally, we had decided to shrink the window AC business. In India, at that time, around 90% of the market was for window ACs. So was the case with washing machines. Most of our products were fully-automatic, whereas in India, even today, 60% of the market demands twin-tub semi-auto machines.”

Subsequently, in 2008, Panasonic ‘reentered’ India with a structured approach and higher degree of commitment, with Panasonic India forming as a wholly-owned subsidiary. From Rs 1,000 crore revenues in 2007, the company has grown ten-fold to achieve
Rs 10,200 crore revenues for the year ended March 2018.

Panasonic India today

Steadily, India grew into a world market for tech and innovation, while a hub got created for crafting sophisticated engineering. The country essentially developed itself into a formidable global IT force.

It was in this positive circumstance that Panasonic charted its reentry, and began to scout for new growth drivers. Essentially a consumer appliances and electronics company, it is interesting to note Panasonic’s rise as an overall solutions provider.

“One of the biggest challenges on reentry surrounded repositioning the brand. Our base was small 10 years ago. We felt the need to increase our supply chain, and therefore, set up manufacturing facilities across India through 2012 and 2013,” Sharma says, taking DH through the company’s journey of transformation.

Today, the company boasts of 15 factories in India. There are two contract manufacturing arrangements too.

For a well-travelled populace, Panasonic is no new name. With a strong presence across categories of consumer electronics and home appliances, the company has remained an able player in the B2C sphere.

Today, around 80% of its India business is derived from the consumer segment, while the remaining 20% from B2B demand.

Within B2C, consumer appliances make up approximately 55% of revenues, followed by anchor electricals – wires, wiring devices, and switchgears. TVs are the largest component in this segment, followed by ACs and washing machines. In recent times, refrigerators have thrown open immense prospects, and are expected to act as a catalyser in the years ahead. Mobile phones are also doing well, with over two million unit sales last year.

As part of B2B, Panasonic offers office automation and system solutions – projectors (over 60% of movie screen projectors in India are delivered by Panasonic), display signages, PBX systems for landline tele-connectivity at the workplace, high-definition video conferencing systems, and polycom systems; and cameras – shoulder-held cameras (with 65% share), broadcast cameras and the VariCam range of cinema cameras.

“We sell our wares to the energy segment as well, such as lithium-ion batteries to the telecom sector, industrial products, sophisticated machinery, welding robots for auto factories, welding machines, and industrial components,” says Sharma, adding that eventually, the said products are majorly used by enterprises and governments.

It is with this broad outlook that Panasonic is scripting an exciting onward journey.

Panasonic India tomorrow

Sharma has been with the company ever since it reemerged in its new avatar in India. As part of his vision for Panasonic, he views the B2B segment as a game-changer.

“Today, B2B is only at 20% of our business, but we see immense potential on that front,” he says. Unlike B2C products, most B2B solutions are majorly imported from Japan, China, and Singapore. This would, however, see some change.

Meanwhile, Panasonic Corporation views India as a mega hub in the region, and has begun to equip its local subsidiary with autonomy and confidence.

“Previously, there was a lot of dependence on Japan for product planning, product development, and even financial planning for marketing initiatives in India. In the last three years, we have become self-dependent in taking decisions on our own,” says Sharma.

Today, the India business not only drives initiatives which are specific to the country, but acts as the headquarters for the ISAMEA (India, South Asia, Middle East and Africa) region. “The idea is to make India a manufacturing hub for the entire region. Also, we want to see how best to share capabilities,” he adds.

Strategy execution

Fundamentally, over the last 10 years, the company executed its strategy in phases – breaking reentry barriers and carrying out aggressive marketing campaigns, signing brand ambassadors to rebuild its brand identity.

“In the last three years, it was about consolidation. From Rs 1,000 crore revenues in 2007, we are at Rs 10,200 crore today, growing 10-folds. As part of that consolidation, we were also aiming to become autonomous,” Sharma informs, adding that the plan is to double consumer business in three years and drive a total growth of 60%, targeting Rs 16,000 crore in earnings. In five years, Panasonic wants to push B2B contribution to 50%.

Interestingly, globally, 77% of revenues come from B2B, while only 23% from B2C. This is starkly opposite to the India trend.

“The difference here is in the opportunity. If you look at our market share in consumer businesses across other countries, it’s very high. B2B products are very high on revenues in other markets, due to their high demand and our capability to supply it. Also, there is a lot of investment going into enterprise, infrastructure and industry, in turn contributing to B2B,” he says.

Meanwhile, even India is pushing its manufacturing, throwing a lot of potential for Panasonic, whose B2B strategy in the country will evolve around two verticals – supply chain and energy storage.

Factory solutions

“In supply chain, we will have three focus areas – manufacturing: smart factory solutions, sensor tech, analytics, sophisticated machinery, and special purpose machines; logistics: cold chain efficiencies; and retail: surveillance, POS and storage facilities,” Sharma adds.

In energy storage, the company is looking at selling batteries and remote monitoring capabilities, among others, catering to powering telecom towers, and data centre capabilities at hotels, hospitals, and ATMs. Also, security cameras for homes and banks are a big draw.

Driving this strategy is Panasonic’s investment and interests in local R&D. Last year, it established an offshore development centre with Tata Elxsi in Bengaluru, to conduct R&D for appliances. It also set up the India Innovation Centre in Bengaluru, which looks into ways at bringing various products and solutions within the corporation together, and launching them in India, through systems integration and customisation. Over Rs 240 crore would be invested in this centre over the coming five years.

“Our resolve around consumer appliances is robust as well. We’ve already pumped in Rs 450 crore over the last three years in manufacturing, while we will invest Rs 500 crore on advertising and sales promotions this year,” he concludes.

Currently, India stands at only 2% of the company’s global revenues of around $75 billion, but with a strong multi-pronged strategy, Panasonic eyes growth in line with the country’s fortunes.

(With inputs from Nandana Praveen)