NEW DELHI/BHUBANESWAR: The fall in value of rupee against the US dollar and unending rise in oil prices have forced manufacturers of many white good products to increase the selling price of their products. However, if the current market sentiments are to be believed, the above factors aren’t enough to stop buyers from shelling out big bucks on appliances.
“Many components aren’t produced in India and sourcing them in dollars has increased our cost. Rising fuel prices, on the other hand, has added to the logistics cost. Despite the hurdles, people will buy appliances as they have money to dispose,” said an executive from a leading retail firm.
Sanjay Johri, chairman of Voltbek Home Appliances, said that if the prices wouldn’t have been increased before the festive season, the growth would have been much stronger.
“Sales during the last two festive seasons have been impacted by demonetisation and GST implementation. This year, we have been such a big macroeconomic event, so I am expecting the industry to grow at a double-digit figure,” Johri said.
Last year, massive pre-GST sales in June had impacted white good sales around Diwali, when growth rate was 5-6 per cent. In the segment, the industry feels that growth of washing machine and refrigerator sales will be at a faster rate as they received a significant price cut of 7-8 per cent when the government in July cut GST on an array of electronic products to 18 per cent from 28 per cent. The company executive cited above said that rising input costs will impact their margins to some extent in the coming quarter and if the rupee against dollar falls down to Rs 75 level, they might be forced to take a pinch.
“The sinking rupee is putting a lot of pressure on us in terms of input costs. If it continues, we’ll be left with no choice but to go for a further price hike,” said Kamal Nandi, business head and executive VP, Godrej Appliances. He added that the company is trying to avoid further hikes at least till the end of the festive season.
Voltas eyes number one spot in market
Tata group firm Voltas, which has formed a 50:50 JV with Turkish firm Arcelik on Thursday, launched their home appliances brand ‘Voltas Beko’. The brand will sell products in four categories — refrigerators, washing machines, dishwashers and microwaves/ovens — which are to be imported from Beko plants outside India. The two firms said that in the next five years, they aim to be among the top three players and in 10 years, they want to be market leaders. “Given the brand value, distribution chain and value-for-money products we are offering, we will become the number one player,” said Pradeep Bakshi, MD and CEO of Voltas Limited.