Godrej Appliances, a part of the Godrej Group, said it will hold back price hike planned for the remaining part of the year on slowing consumer demand and falling commodity prices.
“Oil prices are coming down which in turn have led to plastic prices stabilising and even steel prices have been stable.
As a result of these positive indicators, we don’t think we will need to go in for another price hike,” Kamal Nandi, vice president, sales & marketing, told Business Standard. The company undertook two rounds of hikes in the range of 3-5 per cent in March and June this year.
Crude oil prices have declined by over 20 per cent since its peak while steel prices have remained stable since May. Earlier this year, rising input costs and lack of incentives in the Union budget compelled durable manufacturers like Samsung, LG and Onida to go forat least two rounds of hike this year.
Companies expect that holding back on fresh price increases may encourage consumers to go ahead with purchases especially during the festival season, the biggest sale period.
“Post-June, the demand seems to have come back on track and will add to the growth in the second half of the current year,” Nandi said.
Still, some consumer durable companies plan to go ahead with price revisions as they haven’t been able to absorb cost-escalation. While Samsung is still uncertain of another round of hikes, LG feels that price corrections cannot be ruled out. “The price hikes have not yet neutralised the impact on our margins. While the current raw material costs may give us temporary relief, we will have to consider price corrections on select entry-level SKUs and custom-built units in the near future,” V Ramachandran, director, sales & marketing, LG Electronics India, said.
But even as the industry is trying to gauge the impact of the price hikes and weigh the demand, Godrej is optimistic about the festive season pushing its sales. “We expect 50 per cent of our sales coming during the festive season,” Nandi said.
