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White goods makers eye price hikes on surging input costs

The price hikes will be passed on in tranches once states start lifting the lockdown (Photo: Mint)Premium
The price hikes will be passed on in tranches once states start lifting the lockdown (Photo: Mint)

  • Several large companies already took price hikes on air conditioners, washing machines, television sets, and other home appliances in January.
  • Prices of critical commodities such as copper, plastics, steel, and aluminum used in the white goods industry touched multi-year highs.

Large consumer appliance makers are planning another round of price hikes that may reflect in markets as and when states start lifting the lockdown in a phased manner. This comes against the backdrop of raw material prices continuing to rise.

Several large companies already hiked prices of air conditioners, television sets, washing machines, and other home appliances in January. However, higher input costs merit another round of hikes in the current quarter across a range of products, the companies said. The price hikes will, however, be passed on in tranches, the companies said.

“The increase in commodity prices in Q4 did lead to an upward revision of prices for the white goods industry. We strive to use the best quality material focusing on durability and reduction in total cost of ownership for our consumers… With continued increase in input costs, the prices may go up by July, once the existing inventory is consumed," said Manish Sharma, president and chief executive officer, Panasonic India and south Asia.

Non-essential stores are facing temporary closures across markets. Moreover, consumer sentiment is low, further weakening demand.

“As of now, some states are allowing opening of standalone non-essential stores. So, I hope to see some improvement in sales. However, the sentiment is low and people are not keen to step out. We are keeping a close watch on the situation but we may see a loss of 60-65% against sales projections during the ongoing quarter," he said.

Prices of critical commodities such as copper, plastics, steel, and aluminium used in the white goods industry touched multi-year highs in the second half of the last financial year prompting price increases earlier this year. Copper, steel, aluminium prices were up 44%, 38%, and 22% respectively, brokerage Motilal Oswal Institutional Equities said in a report earlier this month. “This took a toll on companies’ gross margins in the third and fourth quarter of FY21. All companies reported a margin decline of 2–5% in the second half of FY21," it said.

Bajaj Electricals said it initiated another round of price increases in May that will reflect in the market once shops resume operations.

“We hiked prices by 6% to 8% in January. We’ve have raised prices y another 3% to 4% price hike in May. The January one is fully in force, but the May hike is not yet in force as markets have been in lockdown. While we’ve taken a price hike, the impact of that is yet to be seen in the market," said Anuj Poddar, executive director, Bajaj Electricals Ltd.

Input cost increases will be passed on in tranches over the next three to four quarters, brokergare ICICI Securities said. However, price hikes will have negligible impact on the volumes in medium-term, it said.

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