The Rs 1,527-crore Mirc Electronics, maker of consumer durables and appliances, expects revenue and profit growth of 25-30 per cent for 2010-11. Strong domestic demand helped it achieve this, Gulu Mirchandani, chairman & managing director, says in an interview with Viveat Susan Pinto.
The Mumbai-headquartered company has also been able to maintain pricing power, despite increasing competition. Edited excerpts:
What is the plan for new financial year, now that you are likely to post good numbers for last year?
The challenge is to keep this momentum going into the new year. What we were able to do well last year was tap into the unmet needs of consumers with innovative products.
Rather than flooding the market with me-too products, we managed to differentiate ourselves with some good product offerings. That helped. The second aspect was the churn of products. We were quick to do that through last year. This allowed us to take price hikes with the new products we were rolling out.
How much of a price hike did you take last year?
We recently took a price hike of five per cent in air conditioners. Another one is round the corner in the same category. On an average, all new products that roll out are priced higher by about three to five per cent. So, even if the churn is, say, two or three times in a year, you can imagine the quantum of price hikes in totality.
The rate of replacement in mobile phones is about six months, while in other categories it is, at best, a year. So, that leaves a lot of scope for us to come out with new products every now and again.
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Doesn’t this put pressure on your R&D team to deliver on new products?
It does. But that is how the business is moving. Gone are those days when you simply launched the products you felt would work in the market. You have to respond to consumer needs quickly. Quite often, these demands are unstated, so you have to be alert and find the need gaps.
Some examples of the products you have launched that take care of unmet needs?
Pre-cool air conditioners. We launched these about a month and a half ago and they have done well. All you have to do is give an SMS to the AC and it will cool the room before you enter.
Another example is our micro-wave ovens that have 132 auto-cooked Indian menus or our LED/LCD TVs which have anti-glare screens that prevent damage of the eyes.
These are little things but they make a lot of difference and consumers are willing to pay for it, if they find the product good enough. We will continue with this strategy.
You are into quite a few consumer durable and electronic categories, barring refrigerators. Will you consider it at any stage?
Yes, at some stage we will consider it, but not right now. Our hands are full at the moment.
Given the kind of demand in the domestic marketplace, are you setting up new manufacturing units?
We have earmarked capital expenditure of about Rs 40-50 crore for the new financial year. But that will go into enhancing our current three units. For the moment, we are not setting up new manufacturing facilities.
Has the Japan crisis affected you?
One or two of our raw material suppliers are based there, so we do see an impact in terms of supply of components. But it is not a severe issue at the moment.
