New Delhi: Makers of consumer electronics and appliances expect strong growth in the fiscal that began on 1 April due to buoyant demand, concessions proposed in the Budget and improved consumer sentiment.
“The growth of the consumer electronics and appliances industry in the first quarter of the current fiscal was about 10-12%, much better than last year (8%),” said Suresh Khanna, secretary general of industry lobby group Consumer Electronics and Appliances Manufacturers Association.
Factory output data for May, released on Friday, showed that production of consumer durables grew by as much as 12.4%, compared with 2.8% in the same month last year. The index of industrial production grew by 2.7% in the month.
In the three months ended June, sales of refrigerators and air conditioners (ACs) rose significantly compared with the same period last year, company executives said.
Improving sentiment: A consumer durables showroom in New Delhi. Favourable decisions in the Budget, such as a duty cut of 5% on LCD television sets, among others, have helped boost consumer confidence. Madhu Kapparath / Mint
“In the case of refrigerators, the growth was not much in January to March, but after March the growth has been about 5-7%. ACs have grown 8-10%,” said Kamal Nandi, vice-president, sales and marketing, appliance division, Godrej and Boyce Manufacturing. Co. Ltd. “Favourable decisions by the government have helped boost consumer confidence, among other reasons.”
Finance minister Pranab Mukherjee proposed a customs duty cut of 5% on LCD (liquid crystal display) television sets in the Budget.
Industry executives also said events such as the recent general election and the Indian Premier League (IPL) cricket tournament helped in pushing demand for television sets.
“In the first six months of the (calendar) year, Samsung grew by over 25% in terms of value. The growth engines were TVs, as we leveraged IPL very successfully,” a spokesperson for Samsung India Electronics Pvt. Ltd said. “We not only launched 23 new models of LCDs, but also introduced a whole new range of LED (light-emitting diode) TVs.”
Whirlpool of India Ltd saw sales growing month-on-month in the three months to June. “For Whirpool, the growth rate has been 7-8% in April, 15% in May and 25% in June,” Shantanu Das Gupta, vice-president, marketing, said.
Besides healthy growth numbers, there are no pricing issues. Around the same time last year, the firms were coping with cost pressures because of a steep hike in commodity prices and rising inflation.
Inflation has cooled considerably since then, so much so that some companies are planning to reduce prices. Wholesale prices fell 1.55% in the week ended 27 June from a year earlier after tumbling 1.3% in the previous week, the government said on Thursday. The wholesale price index plunged 1.61% in the first week of June, the biggest drop since December 1978, according to Reserve Bank of India data.
Some firms are even planning to spend aggressively on marketing and promotion. “The reduction in customs duty on LCDs will help us spend more on freebies and gifts during the festive season,” said Sabiha Kidwai, marketing manager, Panasonic India Pvt. Ltd.
“We have reduced the prices by 5-7% already,” said Whirlpool’s Das Gupta. “This year we are probably entering a phase where slowdown is behind us. This may be an indication that the worst is over.”
Reuters and Bloomberg contributed to this story.