The company intends to invest Rs 27 crore for setting up its manufacturing facilities and a further Rs 5 crore for its distribution facilities. The company intends to fund this amount through equity route thereby maintaining a low leverage. Photocopiers market is worth Rs 800 crore in India and is growing at a rate of 20 per cent per annum. Before the turn of the century it will be a lucrative Rs 1,000 crore market. Canon India intends to capture 25 per cent of the market share. To begin with the company will be importing raw materials, machineries and components. But it plans to achieve 65per cent indigenisation by the year 2002.

The entry of Canon into India will prove a direct challenge to Modi Xerox. Modi Xerox dominates the photocopiers market in India with a market share of 58 per cent. The second place is held by RPG Ricoh. Canon India, Bee Electronic Machines and Kilburn Reprographics are the other players in the industry. The slowdown in the economy has affected the photocopiers industry also as many companies defer purchase of office equipment till further improvement.

Actually it is not that Canon is entering India for the first time. Earlier it entered the market in 1995 and appointed Bee Electronics for distributing its products. But there were servicing deficiencies and the customers were not satisfied with after-sales service rendered by Bee Electronics. The models introduced by Canon were also not the latest and the best. Even then its market share went upto 27 per cent because of its brand image but subsequently took a retreat and dropped below 15 per cent. Because of thesereasons, the parent company decided to transfer the entire business to its Indian subsidiary Canon India.

One factor which pulled Modi Xerox to the top position in the photocopiers market is its excellent after-sales service which has attracted many customers towards its fold. Canon India will do well to emulate this quality to penetrate market share. Introducing latest and technologically advanced photocopiers, providing spare parts, creating a dealer network are the other areas the company has to concentrate in India. If after-sales services efficiently rendered has pulled Modi Xerox to the top end of the market, RPG Ricoh grew because of entirely different reasons. It slashed the price of both the equipments and after-sales service contract which attracted price-conscious customers towards its fold.

Brand image and technological tie-ups with foreign majors have a telling effect in the industry in boosting the sales and profits. HCL Office Automation Company has a tie-up with Toshiba for marketing thelatter's range of photocopiers. Kilburn Reprographics has a good brand image as the manufacturer of full range of office automation equipment. Bee Electronics has a tie-up with Lanier of USA and RNG of Japan for black and white and colour copiers respectively. Canon India has both technology because of its parent's backing and a brand image which it can encash to its advantage in India.

But Canon has no intention of being price-competitive. It wants to build up its sales and profits on quality platform, emphasising its world leadership in cameras, photocopiers, and imaging equipment. Modi Xerox may be the numero uno in India in terms of market share but Xerox is not the number one in the world. That honour goes to Canon with a 50 per cent market share in colour copiers and 27 per cent market share in black and white copiers. This single fact should more than compensate its disadvantage of a late entry into the Indian market and give it a leverage to catapult itself into the top slot within a reasonable timeframe.

R&D is a major factor in electronics business. Canon invests around 10 per cent of its net sales regularly on R&D. Thus, it is able to find new equipment and re-engineer the existing products to be more suitable for particular needs. In electronics industry, what was yesterday goes to pieces and what is today will no more be tomorrow. In order to protect its customers from technological obsolescence, Canon guarantees the supply of spares and services for five years after the manufacture of the particular product stops. In case of any repair of the product, Canon changes the entire module instead of wasting time in repairing it.

After Canon's manufacturing facility starts producing at full capacity, it will be manufacturing 10,000 machines per annum. Selling these machines will be very difficult and Canon will have to necessarily make inroads into Modi's market share. This means a major ad-war is in the offing as witnessed between Hindustan Lever and Colgate Palmolive or between Castrol India andBharat Petroleum Corporation. MRTPC will have a field day in admonishing the erring players in the warfare.

Canon Inc is a $25 billion company, 80 per cent of it coming from business machines and 8 per cent from cameras. Photocopiers contribute 40 per cent of its sales. It spends more than $1.25 billion on R&D. With this background, Canon India can easily capitalise on its image, quality and performance. It can even penetrate sizably into Moxi Xerox's market share if its business equations prove correct in India.