The year 2006 saw the flat TV segment well on course to overtake the conventional CTV segment. In fiscal 2005-06, the flat TV segment accounted for 48.5 percent of the total CTV market. This share is projected to go up to 60 percent by the end of fiscal 2006-07. In the 29-inch category, the flat CTV completely overtook the conventional CTV in the year 2006. This category is projected to record growth of almost 100% by the end of fiscal 2006-07.

In the 15-inch category, flat models are rapidly replacing conventional models as a result of diminishing price difference between the two, and by the end of fiscal 2007-08, flats are projected to completely overtake conventionals.

Further, the TN electoral order for distribution of free color TV sets to poor families and the upcoming Cricket World Cup in 2007 is to drive growth in the upcoming year.

As per Central Statistical Organisation, the domestic TV receiver production fell by 15% in October 2006 to 533.14 thousand units and by 6% to 550.93 thousand units in September 2006. The fall is attributed to massive 67% spurt in production in August 2006 to 978.43 thousand units. The Dussera and Diwali festival lead demand has lead to massive production augmentation in August 2006, and fall in production on y-o-y basis in the subsequent two months, so as to liquidate the stocks.

Flat TV segment to account for 60% of overall CTV market

The Indian color TV industry is showing a rapid transition towards flat televisions. The year 2006 witnessed a steady increase in contribution of flat televisions to overall color television sales. Flat TV sales in 2005-06 stood at 5 million units. This segment constituted 48.5 percent of the overall CTV market in the year 2005-06, as against 31.6% in 2004-05, registering a y-o-y growth of 66.6%. This trend is likely to continue in the coming years as well. The flat TV segment is expected to surpass the conventional CTV segment and account for 60% of the overall CTV market by the end of 2006-07. The key contributor to this shift in consumer preference is the marginal price difference between the conventional and flat TV segments.

LG and Samsung together accounted for 49% of the market in the fiscal 2005-06. LG maintained its leadership position with sales estimated at 1.35 million units, while sales of Samsung stood at 1.1 million units. The Videocon Group including Sansui, Hyundai, Akai and Toshiba occupied the number three slot with combined sales of 0.96 million units.

The 21-inch segment continues to account for the bulk of flat television sales in the country, contributing 84% to the total flat television market. The growth in this category is propelled due to consumer preference for 21-inch flat televisions as against 20-inch and 21-inch conventional televisions.

The market for 15-inch flat television models is also upbeat and this segment is emerging as a substitute for 14-inch conventional sets, primarily due to the shrinking price gap between the two categories. In the fiscal 2005-06, 15-inch flat televisions accounted for 5.8% of the total market. This segment promises tremendous potential for growth and is slated to witness 100% increase in sales by the end of fiscal 2005-06. The 29-inch category contributed 8.7% to the overall sales of flat televisions, and is expected to double this figure by the end of 2006-07.

In terms of zone-wise sales, the Western and Southern regions of the country continue to be significant contributors to the overall flat TV market. Strong preference for flat televisions is witnessed in the states of Maharashtra in the West, and AP and Karnataka in the South. Punjab and Uttar Pradesh in the North and West Bengal in the East are also major contributors to the flat TV sales in the country.

Cricket World cup and TN order likely to fuel growth in 2007

Flat TV manufacturers are optimistic for the year 2007. They are eyeing the Cricket World Cup in the period March-April 2007, as a major growth driver for the flat TV market. Sales in the first quarter of the year 2007 are expected to be a very strong indicator of the performance of the flat TV market in 2007. Also, the changing taste and preference of consumers, improvement in the economy, and easy finance schemes will also fuel further growth of the flat TV market.

Further, the Tamil Nadu government proposes to distribute television sets free of cost to families that do not own a color TV. Accordingly, it has placed order for 2.5 million 14-inch CTV sets at a unit price of Rs 2750. Pursuant to this, the Videocon group of companies have received orders for 0.6 million sets.

The TN order and the upcoming Cricket World Cup are going to provide a great impetus to overall CTV sales in the year 2007 and will be a major factor in the growth that the CTV market will record in 2007 over the year 2006.

Growth to be propelled by Low penetration level

A challenge as well as opportunity before the industry at present is the low penetration level of flat televisions in semi-urban and rural markets. With the improvement of the Indian economy, availability of flat TV models practically at all the price points, and increasing awareness in the semi-urban and rural market, manufacturers are optimistic about increasing penetration. With the conventional segment slowly bowing out to its flatter counterpart, flat television segment holds strong potential for growth. Another additional cap in this segment is the growth of the slim TV category. Manufacturers are focusing on this segment and have a wide range in the pipeline for the coming year. This may fuel the growth of the flat TV market. Increasing affordability and aggressive targets set by all the brands will definitely give an impetus to this already expanding market and the Indian color television industry is set to see a flat rage in the coming years.

Rupee appreciation can facilitate lower input costs

Between 29^th September and 29^th December 2006, the Indian rupee has appreciated by 3.9% over US$ to Rs 44.23 per dollar. The CTV manufacturers are importing CTVs in knock down conditions or import significant portion of the inputs. Hence, they stand to benefit from rupee appreciation, which will facilitate lower input costs in the quarter ending December 2006 over the previous quarter. Even on y-o-y basis, there has been appreciation of rupee from about Rs 45.40 per US$ in the quarter ended December 2005.

Outlook

With the Cricket World Cup in 2007 and the accelerated growth witnessed by the flat TV segment, the demand for color TVs is likely to show strong growth. Moreover, the low penetration levels in the rural and semi-urban markets, coupled with the increasing affordability of consumers will drive growth in the upcoming calendar year. Overall, the short-medium term outlook for the industry is positive.