Just years after BPL reached the zenith in the consumer electronics business, it came crashing down. Will Flipkart help them bring back the glory?

BPL returns The legacy of an iconic electronics brand all set to invade your home againAjit Nambiar at Dynamic House
news Corporate Tuesday, July 05, 2016 - 21:51

At the peak of its success, in 2002, BPL sold well over a million television sets across India. Having dominated the market through the 1990s, the Bengaluru-headquartered electronics company wasn’t just selling television sets and refrigerators but also a host of other products like medical equipment, music systems and home theatres.

“We sold everything then,” says Ajit G Nambiar, Chairman and Managing Director of BPL, and son of its founder TPG Nambiar. Sitting next to him in the large conference room at BPL’s HQ Dynamic House in Church Street, is his colleague Manmohan Ganesh, a General Manager at the 53-year-old company. Manmohan, endearingly called Manu, is quick to rattle off a long list of products the company made during its halcyon days ranging from vacuum cleaners and photocopiers to gas stoves.

That’s right, BPL made gas stoves. “It had the perfect blue flame, which meant complete combustion of the gas. It was the best,” Manmohan recalls with a glint in his eye, adding wryly that housewives however looked at the perfect blue flame with suspicion, “They were used to the imperfect yellow flame."

As Ajit looks on with his gentle smile, Manmohan explains the perfection of BPL’s products with child-like excitement.

“We were the first to introduce the concept of door-to-door salesmen for vacuum cleaners in the country,” Manu says with a hint of pride. “So you were the guys who unleashed those men on us?” I ask, as the room cracks into laughter, and Ajit puts his hands up says, “Guilty as charged! And that wasn’t the only first, we did a lot of firsts.” 

And that they did. According to the company, BPL was the first in the country to introduce a wide-screen TV, 3D TV and PC TV. BPL was the first to bring the VCR to Indian homes, also the portable CD player and alkaline batteries. They brought the home-theatre to our living rooms, gave our kitchens the frost-free refrigerators and launched the first non-chlorofluorocarbon (CFC ) compressor. “You see these ads claiming to be the first fridge with a freezer which can be converted to a fruit-vegetable compartment? Well, we did it in 2000. It was called a Converti. We were way ahead of the curve,” says Manu, “We were even the first to come up with the idea of a rat mesh below washing machines.”

A former employee with Philips, which was one of BPL's competitors then, remembers with envy, “They had a great distribution network down south, and had a stronghold over the wholesalers up north. They made products which never failed and yet we cost effective. They were unbeatable.” In India, that’s a rare compliment from a competitor.

But by 2004, BPL’s undisputed market leadership came crashing down. A combination of reasons, from the falling fortunes of his joint venture partner Sanyo to disagreements in the family, led to its flagship consumer business coming unstuck. There was little financial discipline in the company, and they spread too thin too fast by diversifying rapidly. Weakened from within, the company was unable to pushback aggressive market-share attacks from Korean companies like LG and Samsung. Soon after, it’s joint venture with Sanyo failed after an earthquake caused extensive damage to Sanyo’s semi-conductor manufacturing facilities in Japan. BPL’s consumer electronics business too was reduced to rubble.

The company did not entirely vanish, and it continues to make medical electronics and other products. But for years now, the Chairman Ajit Nambiar has been trying to pave its way back to glory. It saw some success in the high technology electronics space, but victory in the consumer electronics business remained elusive. However, that might just be happening now.

Old school electronics comes to e-retail

In July 2015, India’s largest online e-retailer Flipkart approached BPL expressing an interest in becoming BPL’s exclusive online retailer for their consumer products. It wasn't a shot in dark. Despite several years of business wilderness, the company says 18 million BPL products are still being used in the country. What further caught Flipkart’s attention was a survey which showed that BPL was still one of the top five preferred consumer electronics brands in India. Flipkart needed the credibility BPL had. Test runs selling BPL TVs on Flipkart have been conducted and the response has been encouraging.

For BPL, Flipkart’s overture was a godsend. Through Flipkart, they had direct access to the market which saved them the trouble of setting up a distribution network all over again. Flipkart would help with managing the inventory and delivery, and BPL would benefit from immediate consumer feedback. They don’t have to pay taxes in every state, and marketing costs are low. BPL could now focus on the one thing they knew best - making competitive products.

There is however one major worry in Ajit’s mind. “We have to get used to the youngsters at Flipkart,” he says with a laugh, “We get nervous that they run at breakneck speed.” Manu chips in, “They called and asked if we can deliver the products the week after, I said no, we cannot!”

BPL has now leased a plant in Baddi, Himachal Pradesh where the television sets are being assembled. “The products have been made to our design and our specifications. We have a contract signed with our suppliers stating that they cannot give this design to anyone else, so it is exclusively our design, manufactured by them,” says Nambiar.

Over the years, the economy of production has changed. Manu points out that the most cost effective option now is to get the different parts of a product manufactured separately and assembled, but earlier, during BPL’s heydays, the game was different.

The BPL story

BPL’s founder TPG Nambiar moved to the US from the UK in the early 1960s, and started visiting India often. He was working with the tech multinational Westinghouse, and set up the first air-conditioning system in India at the Oberoi Hotel in Delhi. During his visits to India from New York, he realised that the country provided a great opportunity for him to start something on his own.

In 1963, he signed a collaboration agreement with Anthony Sheridan of British Physical Laboratories (Instruments) Ltd. UK, and started producing Precision Measuring Instruments in India. The first factory was set up in Palakkad in Kerala, which is still under operation not just because of low cost, but also ‘sentimental reasons’, as Ajit puts it.

TPG Nambiar

TPG Nambiar signing an agreement with Anthony Sheridan in 1963.

Their first product had nothing to do with consumers. It was a defence sub-contract from the government. They made Hermetically Sealed Panel Meters for Bharat Electronics Limited (BEL), which went into the wireless sets being used by the Indian Army.

It was a delicate product, and was expected to have zero failure rate. “You can’t even compare it with consumer products. The experience of producing a panel meter for the defence had got him into the whole way of looking at quality, meticulousness, you know, meeting the expectations of the customer,” says Manu. And it was this meticulousness which would go on to define BPL’s excellence.

Soon after, BPL started manufacturing medical and testing equipment. “We were making heart-care products. Here too, the failure rate had to be zero. We have had high-quality discipline since those days,” says Ajit.

In 1982, colour television came to India with the launch of the Asiad Games. BPL grabbed the opportunity and started manufacturing them, even though the demand for black and white TV sets remained high for years to come. By the 1990s, when economic liberalisation swept through India, BPL stepped up their production and unleashed several products in the Indian market. There were a few other players, but there was one thing which set BPL apart – they designed and fabricated almost every little part of their appliances all by themselves. “We even had our own printing press for our brochures,” reminisces Manu.

BPL's first factory in Palakkad, Kerala

From the picture tube to the plug sockets, BPL produced everything. They had 28 plants, of which 20 were in and around Bangalore. Only semi-conductors and chips were outsourced. Soon enough, they rebranded the company to be called BPL India. “No one would want to buy anything from a company named physical laboratories,” says Manu.

Few years down the line they realised there was a huge export market and people in Europe were willing to pay a premium for a good product. So the company started exporting TV sets too, and dropped the ‘India’ in the name to become just BPL.

BPL's first product, a part of the wireless set

“After that there was a huge explosion. Business just took off,” says Manu, “Our chairman TGP Nambiar met several companies and Sanyo said they are willing to share the technology with us for a technology fee and a royalty, and also assist us in setting up the manufacturing infrastructure.” The BPL-Sanyo partnership was born. Apart from feeding the technology to BPL for its own products, there were also a line of products under the BPL Sanyo brand.

“Unfortunately, at the time Sanyo got into this JV with BPL, they also made massive investments in lithium battery and solar technologies. The investments they made in that actually killed that company. Finally, in 2009, Sanyo shut down. Their collapse took down their entire TV and appliances business we had which was jointly run,” says Ajit. “The plant that BPL had, on Old Madras Road, was sold to pay back Sanyo’s debt,” he adds, and looks at the picture of his father TPG Nambiar kept in the conference room. By 2009, BPL’s own problems had also caught up with it.

Reviving the legacy

Since then, BPL has stuck to medical electronic products like bedside monitors and ECG machines. In 2013, Goldman Sachs invested Rs. 110 crore in BPL’s medical business in return for a 49% stake. But it is from the ashes of their consumer electronic business that the Flipkart partnership is going to be built on.

“Our main focus now is television. We will also be launching washing machines, and then move on to other appliances like air-conditioners,” explains Manu.  From a turnover of just Rs. 7 crore during the last quarter of the previous financial year, BPL has a target of reaching over Rs. 650 crore within 3 years. Will BPL rise like the proverbial Phoenix to reclaim its past glory?  “The challenge is to keep up with the market, and we are up to that challenge,” says Ajit.

With inputs from Prajwal Bhat

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