Kitchen appliances may prove too hot for MNCs

As multinationals such as LG Electronics, Whirlpool and TCL vie for a large share in the kitchen appliances segment, the established players and some analysts are sceptical of their success.

Though multinationals bring an added advantage of quality assurance and consumer trend of upgrading towards branded products, they will have to tread carefully as the grey market is dominant, said an analyst.

Established players such as Jaipan say the market is sluggish and is not expected to show healthy growth.

"The entry of multinationals will not shore up the already shrinking margins in the business. Locally manufactured electric iron is already costlier than an imported one," said J N Agarwal, managing director, Jaipan Industries, which manufactures appliances such as mixers, blenders and juicers.

He added "Our company is utilising only 33 per cent of the manufacturing capacity due to decreasing demand."

However, others such as marketing consultant Jagdeep Kapoor said, "The small appliances segment offers a better bargain as players can tap into the real estate boom in the country. The segment is estimated to fare well in the next 2-3 years."

Extending its leadership in the refrigerators segment, Whirlpool India plans to launch a range of home appliances in the Indian market and Chinese multinational TCL also has small appliances on its agenda.

Siemens Home Appliances has entered into preferential partnership with Hacker, a German manufacturer of modular kitchens, to supply home appliance to their kitchen solutions.

Following suit, LG Electronics has reportedly formed a separate kitchen appliances business by merging three categories, washing machine, microwave oven and vacuum cleaners.

Kapoor, who is the chairman and managing director, Samsika Marketing Consultants, said, " The durable firms are already present in homes through air-conditioners, colour televisions and have entered kitchens by introducing washing machines and refrigerators. The focus on small appliances is a natural extension to leverage the brand's credibility and achieve greater penetration by offering wider products."

C M Singh, chief executive, TCL India, said, "The small appliances segment is fast moving and has been well accepted by the trade. Though there is a crazy war on in high -end products such as LCDs and plasmas, the price drop of about 15-16 per cent and healthy 10 per cent margin have made kitchen appliances an attractive segment."

Though analysts could not furnish exact figures of the fragmented small appliances segment, restricted to the bigger towns, it is dominated by the unorganised grey market."

It is estimated that 40,000 branded rice cookers, 2,40,000 sandwich toasters and 50,000 blenders are sold in the domestic market every year.