Consumer durables companies blame inflation, weaker rupee and milder summer for slide in demand.
Makers of consumer durables expect to close this financial year with lower sales growth, thanks to a sustained slowing in demand.
The Index of Industrial Production, an indirect indicator of consumer demand, shows the growth in durables shrank 0.3 per cent in October. This is in keeping with the trend since April, with IIP numbers for consumer durables in single-digits as opposed to double-digit growth last year.
Apart from inflation and interest costs, what has impacted these companies is the rupee depreciation and adverse weather conditions. Summer this year was unusually wet and mild, impacting sales of air conditioners. Sales were down at least 20-25 per cent for most.
The rupee has depreciated by 20 per cent since August, compelling most to take up prices.
LG, the largest consumer durables company in India, says it will miss the Rs 20,000-crore turnover target it had set for this year. "We are likely to see lower growth this year as opposed to last year," says Y V Verma, chief operating officer, LG Electronics, declining to indicate by how much.
Last year, LG closed the January-December calendar year with growth of 20 per cent and a Rs 16,500 crore turnover.
Samsung, the number two player, says it is likely to see growth of 30-40 per cent this year, compared to over 40 per cent last year. Market experts say what has driven Samsung's sales this year is the business in mobile phones and information technology products. It had, this year, launched a whole range of products in mobile and IT, from the Samsung Note to upgrades of its Galaxy range of smart phones and tablets. According to the company spokesperson, they propose to keep the momentum going in the segment in the coming years, even while keeping an eye on high-end consumer durables products such as flat panel TVs, frost-free refrigerators and fully automatic washing machines.
Samsung also invested Rs 350 crore in increasing the capacity of its mobile phone unit at Noida, near Delhi, this year. Capacity, 12 million units per annum before the enhancement, has been tripled, says the spokesperson.
Videocons president Pradeep Dhoot also anticipates lower growth this year but declines to give specifics. Videocon is number three in the space after LG and Samsung.
Kamal Nandy, executive vice-president, sales & marketing, Godrej Appliances, says growth this year for his company would be lower by at least 10-12 per cent over last year. "Last year, we grew by about 30 per cent in terms of sales. This year, we likely to see growth at 18-20 per cent only," he says.
Panasonic's director, sales & marketing, Manish Sharma, says sales growth for his company this year would be lower by at least four to five per cent in comparison to last year.
