Gujarat trade body pulls plug on 6 durables brands

Rajkot-based Television & Appliances Traders Association (TADA) has come upon six leading consumer durable brands - LG, Philips, TCL, Onida, Godrej and Whirlpool -heavily and has decided to indent stocks of six major brands with immediate affect and will start from July 10 and will end on August 5.

The decision was taken during the brainstorming session organised by the TADA members on Sunday.

The association, consisting of the trading community dealing in consumer durables, had invited the business fraternity from across the state to Rajkot on Sunday to discuss the business attitude by six leading major brands.

Followed by a three-day bandh, unanimously given by the consumer durable business fraternity, over 150 members representing various trade bodies of Gujarat decided to indent stocks came upon the decision.

"We are not going to purchase products of these six brands with immediate affect till August 5, as they have started selling/channeling their products through shopping malls, thereby passing on phenomenal trade discounts to them," said KA Desai, president, TADA and owner of Desai Enterprise.

"We are not opposed to these companies doing businesses through shopping malls but at the fact that they are providing very high margins to these shopping malls, which are somewhere between 8 and 10 per cent, as against what we get, which is between 2 and 3 per cent, said Desai adding, "How can we sustain such a biased business practice?"

Consumer durables trade in the state of Gujarat has an estimated turnover of Rs 900 crore per annum, with 10 per cent to 12 per cent amount being slated towards levies and taxes. As many as 10 lakh pieces of consumer durable and home appliances priced at an average Rs 9,000 per piece are sold every year.

"We are catering such a huge market demand as compared to shopping malls and have already created competition by selling few brands from one single outlet point," said Apurva Ganatra, Rajkot-based home appliances showroom owner.

Trade of consumer durables through existing and traditional distribution channels is nearly 98 per cent whereas through existing shopping malls is only 2 per cent.

Presently there are at least 21-22 leading brands having sound market share. Of this, the six brands have a market share estimated up to 30 per cent translating into business volume in parity of Rs 300 crore, added Apurva.

The situation today is that if a showroom owner from a nearby town or village indents product of similar brand from the shopping mall, instead of indenting it from my showroom, he gets a marginal trade discount in parity to 6 per cent to 7 per cent whereas we can offer him at the most 2 per cent on the highest side, said Alpesh Patel of Victory Corporation, another showroom owner from Rajkot.

"The days are not far that at least 25 major distributors will be compelled to declare bankruptcy in business," Patel added.

Meanwhile, with the boycott of purchase of six major brands for one month, we are sure that this companies will loose reaping business benefits on festive occasion of Janmastami, but meanwhile we will promote other brands aggressively in the markets, assured Apurva Ganatra.

However, if still this six major brands despite of such a market ruckus do not realize, we will boycott purchasing their products in coming years and shall jointly indent huge quantum on behalf of the trade of other brands, he added.