If rupee breaches the 62-mark, we will have to raise prices: Manish Sharma

Interview with MD, Panasonic India

Having launched smartphones recently, Panasonic India is now pulling all strings to make an impact in the growing smartphones market in the country. Manish Sharma, managing director of Panasonic India, tells Sohini Das that smartphones are perhaps taking the market away from televisions, and the future lies in digital convergence. Edited excerpts

Panasonic had recently launched smartphones. Going forward, what strategy do you plan to adopt to gain marketshare in the segment?

We recently launched our first smartphone, the P51, in the Indian market and in the coming months, we plan to bring five more devices. Going forward, we would eventually enter the feature phones market in India, too. As a strategy, we have decided to focus on designing products that are India-specific and furthermore, focus on optimisation of performance. Speed would be the keyword in the smartphones segment, especially after the rollout of 4G services in the country. Being a camera brand, we have the technology in-house, and plan to use the digital camera technology to enhance the performance of our smartphones in the future. With the advent of smartphones, the ready-to-shoot camera market is anyway shrinking.

We have tied up with Jaina Marketing and Associates, the firm that also owns Karbonn mobiles, for distribution of our smartphones in the country and plan to have 20,000 retail counters across the country within the next three months. Smartphones have so far reached Tier-III cities, but eventually it would penetrate the rural markets. The smartphone market in India is growing at 35 per cent at the moment.

Is there any plan to integrate technologies across different consumer goods verticals like you mentioned for camera and smartphones?

One interesting trend which I think has emerged in India off late is the exceptional rise of smartphones in taking away the market from the other consumer durables segment, most significantly the television segment. While there is no scientific research available on the trend so far, what I presume is a person's entertainment needs are to a great extent catered through applications on a smartphone; one can watch videos, movies, television programmes and much more on a phone and that too, on the go. More, with rising inflationary pressures and shrinking disposable incomes, as one invests on a smartphone, he often postpones his decision to buy a television set.

Therefore, a television now has to be smarter. We are trying to offer that in our televisions, one can watch YouTube videos, chat on Skype, use the television set as the central hub linking it with the house's security and surveillance systems. We have developed a Viera remote application which would help connect the phone and the television set seamlessly.

With the rupee depreciating, are imports hurting? Do you plan to increase localisation and/or increase prices?

Yes, of course the depreciating rupee is hurting imports. Though we get the benefits of the Asean Free Trade Agreement for some countries from where we import, nonetheless we still have to pay duties. And, we are definitely looking at increasing localisation in our products and are in talks with local component makers for that, like, for example, we now plan to source motors for our washing machines from India. As for our television sets, the localisation levels are currently at 30 per cent. While we are working on increasing localisation, it cannot go above 40 per cent as television panels are not made in India. We have factored in fluctuations till the rupee hits 62 vis-a-vis the dollar, after which we would have to pass on the cost increase to consumers. There would be a price rise then.

Are rising interest rates hurting margins as you offer interest-free equated monthly installments to lure customers in a tough market?

Finance costs are constantly rising. Three years back, 18-20 per cent of our consumer durables sales would be financed. Now, 30 per cent of our sales are through the finance route and the average outflow per customer is in the range of eight-nine per cent. I can say, in the past few years, the overall outlay for the company in terms of finance costs has almost doubled, which is obviously impacting margins by 0.8-one per cent. The last four months have been tough for the consumer durables segment. We, however, expect consumer sentiments to pick up by the festival season.