Consumer durables industry sees recovery in next fiscal year2 min read . Updated: 29 Dec 2020, 10:42 PM IST
Firms are hopeful that covid-related disruptions in supply and demand should recede by next year
NEW DELHI : Despite a surge in demand, makers of home appliances and consumer electronics expect lower growth rates, even negative growth, in FY21 with recovery only beginning in FY22 as companies await market stability and normal supplies.
For the full year FY21, companies are expected to report a 10-15% dip in sales, according to a November report by Emkay Global Financial on the consumer durables sector, citing data from industry executives. The fall will be largely on account of closures in the first quarter.
The pandemic-induced lockdown wiped away peak summer sales for companies, especially those selling air conditioners and refrigerators.
“We are optimistic that the overall industry in FY22 is expected to touch the pre-covid levels of FY20," said Pradeep Bakshi, MD and CEO, Voltas Ltd. For the company the period between March and June normally accounts for over 50% of room air conditioner sales—months impacted by the lockdown. “And this year we lost close to two months of our summer sales. However, the market started picking up with the gradual unlocking of the economy in May."
“We are confident of a robust growth in 2021, starting from February, with the South region opening up first for summers, followed by rest of the market in March. The post-festive period remains critical," Bakshi said.
The lifting of the lockdown has led to several retailers and companies reporting a jump in demand for laptops, dishwashers, large-screen TV sets, washing machines and kitchen appliances. While, this has helped several categories perform well and report growth over the last year—especially for large companies and organized retailers—aggregate demand for the industry as a whole has not been that strong, said an industry executive requesting anonymity.
In November, retailers of electronics and consumer durables reported a 12% growth over the previous year, according to latest data released by the Retailers’ Association of India (RAI). This was the only category of retailers along with food and grocery that reported growth in November, a period of festive sales.
Companies are hopeful that covid-related disruptions in supply and demand should recede by next year. “Kitchen appliance and other small appliances are doing well. That said, given that we missed out a full quarter, it’s a little aggressive to say that we’ll have a growth on a full year basis. But quarter-on-quarter growth right now is good, full year looks a little challenging," said Anuj Poddar, executive director, Bajaj Electricals Ltd. “In FY22 we should do well...but some of the heightened growth seen in the last few months will go back to normal. I would yet expect growth next year over a normal financial year," said Poddar.
“What people buy or where they buy—trustworthy, reliable brands have benefited—I expect that to continue and give us market share gains," said Ritesh Ghosal, chief marketing officer, Croma, Infiniti Retail Ltd.