Durables riding realty boom

Consumer durables and electronic appliances are riding on the back of a boom in real estate.

As residential apartment blocks mushroom across cities, there is a rising demand for home appliances such as ceiling fans and water heaters. Companies are eyeing to tap this demand by exploring new avenues such as tie-ups with builders apart from launching new products, expanding retail presence and exploring new business opportunities.

According to a study conducted by real estate consulting agency Cushman & Wakefield, during 2006-2010, top-seven cities alone are expected to generate a residential demand of about 1,100 million (110 crore) sq ft.

While property developers are luring customers with freebies such as pre-fitted kitchens, durable players are optimistic about boosting sales growth. R Ramakrishnan, executive director, Bajaj Electricals, said, "The company's sales proportion is tilting towards new construction. Since the past 3 to 4 years, the company's ceiling fan sales from new construction have jumped to 30 per cent of total sales from about 20 per cent earlier."

The company is also bullish on emerging segments such as large-format retail. The company expects about 15 per cent ceiling fan sales from the emerging organised retail format.

The Kolkata-based Khaitan Electricals estimates ceiling fans to register a year-on-year growth of 30-40 per cent. Sunil Khaitan, vice-president and managing director, Khaitan Electricals, said, "The real estate boom would create 15-20 per cent more demand. The company intends to scale up its market share in ceiling fans from 16 per cent to 20 per cent." It hopes to sell 28 lakh units of ceiling fans from 22 lakh units at present.

Others such as Siemens Home Appliances and Samsung Electricals are adopting the institutional sales route to tap new business opportunities. Siemens has existing tie-ups with property developers to provide modular kitchens to households. This year Korean giant Samsung Electronics aims to targeting 20 per cent sales from B2B marketing of high-end products such as air-conditioners, LCDs and colour televisions. As part of its strategy, Samsung has appointed dedicated personnel to capture the emerging business opportunities in the top 20 cities.

Meanwhile, Khaitan Electricals is foraying into retail by launching two retail formats Khaitan Fantasy and Khaitan City.

Bajaj Electricals is also expecting growth in other product categories such as water heaters, chimneys and gas stoves and is expected to announce an international partnership soon.