 "Godrej, Panasonic, Daikin raise prices after excise duty hike")
Consumer durables makers Godrej Appliances, Panasonic and Daikin have raised the prices of their products by three to five per cent, passing on the burden of the two per cent increase in excise duty that kicked in from January 1. The revision in excise duty is following the government’s decision not to continue with a two per cent concession on duty after December 31. As a result, the duty on manufactured goods moved up from 10 per cent to 12 per cent on January 1.
While a price revision was expected, consumer durable and electronic goods makers have been delaying it fearing an impact on consumer demand. The consumer durable and electronics market has been tepid after Diwali with purchases remained few and far between. The index of industrial production (IIP) for October 2014 - the latest period for which IIP data is available - shows that consumer durable production contracted 35.2 per cent for the month, a sharp decline compared with 11.2 per cent in the previous month.
Analysts don't expect the market to pick up anytime soon as consumers remain cautious.
“We decided on a price hike owing to multiple factors,” said Kamal Nandi, business head and executive vice-president at Godrej Appliances. “The first was, of course, the excise duty hike of two per cent. The second was the depreciation of the rupee from Rs 60 to Rs 63.5 a dollar in the span of a month and the third was input cost pressure. All of this compelled us to increase product prices.”
Manish Sharma, managing director at Panasonic India & South Asia, says the excise duty concession announced earlier had a positive impact on sales. “The rollback in duty will impact sentiment, which will hit sales. While the price of air conditioners has been increased by three per cent, appliance prices have been raised by two-three per cent,” he said.
Kanwal Jeet Jawa, managing director at Daikin Airconditioning India, said: “Although we have attempted to offset the pressure created by the depreciating rupee as well as an excise duty hike, the current economic conditions are forcing us to recalibrate our existing prices. We are increasing prices by four per cent.”
According to Eric Braganza, president of Haier Appliances India, the price lines of most manufacturers, including his own firm, will change within a week. “Most companies are liquidating their old stocks, which were carried forward from last year. Once that is complete, the new prices will kick in for fresh stocks,” he said. Shantanu Dasgupta, vice-president (corporate affairs and strategy) at Whirlpool, said his firm would shortly take a call on raising rates.
EXPENSIVE AFFAIR
While a price revision was expected, consumer durable and electronic goods makers have been delaying it fearing an impact on consumer demand. The consumer durable and electronics market has been tepid after Diwali with purchases remained few and far between. The index of industrial production (IIP) for October 2014 - the latest period for which IIP data is available - shows that consumer durable production contracted 35.2 per cent for the month, a sharp decline compared with 11.2 per cent in the previous month.
Analysts don't expect the market to pick up anytime soon as consumers remain cautious.
“We decided on a price hike owing to multiple factors,” said Kamal Nandi, business head and executive vice-president at Godrej Appliances. “The first was, of course, the excise duty hike of two per cent. The second was the depreciation of the rupee from Rs 60 to Rs 63.5 a dollar in the span of a month and the third was input cost pressure. All of this compelled us to increase product prices.”
Manish Sharma, managing director at Panasonic India & South Asia, says the excise duty concession announced earlier had a positive impact on sales. “The rollback in duty will impact sentiment, which will hit sales. While the price of air conditioners has been increased by three per cent, appliance prices have been raised by two-three per cent,” he said.
Kanwal Jeet Jawa, managing director at Daikin Airconditioning India, said: “Although we have attempted to offset the pressure created by the depreciating rupee as well as an excise duty hike, the current economic conditions are forcing us to recalibrate our existing prices. We are increasing prices by four per cent.”
According to Eric Braganza, president of Haier Appliances India, the price lines of most manufacturers, including his own firm, will change within a week. “Most companies are liquidating their old stocks, which were carried forward from last year. Once that is complete, the new prices will kick in for fresh stocks,” he said. Shantanu Dasgupta, vice-president (corporate affairs and strategy) at Whirlpool, said his firm would shortly take a call on raising rates.
EXPENSIVE AFFAIR
- The consumer durable/electronics market has been tepid post Diwali
- Analysts don't expect the market to pick up soon