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This festive season will be an expensive one for those looking to buy consumer durables with companies planning a fresh round of price hike of up to 5% to offset impact of weak rupee and additional cost to comply with changes in energy efficiency ratings norms.
While Voltas Ltd and Blue Star have already firmed up plans to increase prices of their air conditioners, Panasonic and Sony are keeping a close watch on rupee movements.
"There is double pressure on consumer durable companies. One is rupee depreciation and the other is change in energy efficiency norms," Blue Star Executive Director & President- Air-Conditioning and Refrigeration Products Group B Thiagarajan told PTI.
Compliance with new energy efficiency ratio norms will increase costs for the companies, he added.
"Margins remain under pressure and we will have to pass on the cost to the customers and hike prices by up to 5%," Thiagarajan said.
Echoing similar views, Voltas Ltd Chief Operating Officer Pradeep Bakshi said: "We will be forced to increase prices when the new star rating norms become applicable. Price hike will be around 3%. Also, there is pressure on margins due to rupee depreciation."
As per the Bureau of Energy Efficiency, the energy efficiency ratio for all star bands would go up from January 1, 2014. It would mean that for the star bands ranging from 1 to 5, companies will have to decrease the energy consumption for each of the rating.
The companies are, however, planning to introduce products complying with the new star ratings from October to ensure smooth transition to new norms.
The sliding rupee has also become a huge challenge for the companies to hold on to existing product prices.
"We are keenly observing the rupee movement and will pass to consumers only if the it depreciates further and falls below 62 against the dollar. The quantum of price hike will depend on the situation," Panasonic India MD Manish Sharma said.
Likewise, Sony India is also keeping its options open.
"We are monitoring the situation but we also do not want to demotivate customers by hiking prices in this tough market condition," Sony India Head-Marketing Tadato Kimura said.
Last month, most consumer durables makers increased prices of their products by up to five% to offset impact of rupee depreciation against US dollar.
