Saregama India Ltd: Striking a Digital Chord
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Case Details:
Case Code : BSTR237
Case Length : 20 Pages
Period : 1986-2005
Organization : Saregama India Ltd.
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : Media and Entertainment
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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EXCERPTS
The Cassette Revolution
Audio cassettes became popular in India in the early 1980s. Their increasing popularity came as a rude jolt to GCIL because the company had invested heavily in record manufacturing facilities and could not build capacity in the new technology as swiftly as it might have wanted to. By the mid-1980s, the audio cassette revolution had swept through India and close to 95% of music sales were in the cassette format.
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These developments resulted in a worsening of GCIL's financial position. A drastic drop in record sales, discounts given to dealers, and low realizations because of lowering of prices pushed the company to losses.
This period also saw the emergence of intense competition in the industry. Several big and small cassette manufacturers/recording studios mushroomed in every corner of the country. Most of the small players, numbering 500 by some estimates, sold cassettes made with smuggled components. They successfully sold folk, devotional, and film songs in the local languages, genres almost completely ignored by GCIL...
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RPG Acquires GCIL
In The RPG Group acquired a major part of EMI's stake in GCIL in 1985 (Refer Exhibit V for the companies in the RPG group). It also took control over the management of GCIL. GCIL was a cash-starved company when it came into the fold of the RPG Group. In 1988, the RPG Group acquired the brand rights of HMV in India for a period of 10 years. By 1994-95, the RPG group was able to steer the company back to profitability. During this period, the RPG Group also set up Music World retail outlets across major cities in the country...
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The Early 2000s
Compact Discs or CDs began to gain popularity in India in the early 1990s. In the early years, a single CD (of Hindi film songs) sold for around Rs. 350 ¾ a price which put it out of the reach of the majority of Indians.
However, with time, some of the players, especially SCI, expanded their CD production capacities. SIL seemed to have missed the bus again, concentrating on the manufacture of cassettes instead of CDs.
Yet, the management seemed to be quite happy with the state of affairs... |
Excerpts Contd... >>
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