 "Consumer durables")
Ajit Shah, a consumer durables retailer in the suburb of Mumbai’s Santacruz, is a worried man. The lack of customers due to a ban on high-value notes is gnawing at him. “I’ve barely had any customers in the past three weeks,” he says. “The first three days after (Narendra) Modi announced demonetisation virtually saw business come to a standstill. I am expecting to register a loss this month,” he admits.
Shah is not the only one who feels this way. Retailers and manufacturers of white and brown goods are feeling the pinch on account of the government’s demonetisation drive announced earlier this month. Conversations with companies and retailers across the board reveal that sales of refrigerators, air conditioners, washing machines, microwaves, television sets and audio equipment are down nearly 30-40% in urban areas and 60-70% in semi-urban and rural areas.
“The market is down and my sense is that it will take some time to recover,” says Eric Braganza, president, Haier Appliances India. “December should be better than November, but the current month is certainly a challenge,” he says.
In an otherwise normal year, November is a time when the wedding season kicks in. C M Singh, chief operating officer, Videocon Industries, says, “We don’t normally feel the pinch since the wedding season begins right after Diwali. What we therefore get is an extended sales period, which stretches right up to Christmas/New Year. But this year, the December quarter overall will not be that great even though the October month was good in terms of sales due to positive consumer sentiment following good monsoons and salary hikes. Demonetisation has temporarily halted that feel-good factor.”
Industry body Consumer Electronics and Appliance Manufacturers Association (CEAMA) had projected a nearly 14% jump in sales of TV sets this year to 16.5 million units. This number is expected to come down following a weak November-December, industry sources said. The same goes for refrigerators, washing machines and air conditioners, where CEAMA had projected a growth of 6-10% in volume sales this year over last year. This again is expected to be scaled down, industry sources say. Kamal Nandi, business head and executive vice-president, Godrej Appliances, says. “While finance schemes in times like these do help to some extent, it is not likely to bridge the deficit,” he says.
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“People are cash-strapped and that has impacted buying sentiment,” he says.
According to industry estimates, the split of cash to finance-based sales in consumer durables is around 35:65. While most brands are said to be running aggressive schemes right now where consumers can buy today and pay in 60 days and even extending credit to dealers, it is not helping push sales.
The bigger worry for manufacturers is also the depreciation of the rupee against the US dollar, which will mean the pressure of taking up prices.
“At this stage, no manufacturer will consider raising prices since the market is down. That will have to wait for some time,” a senior executive of a consumer durables firm says.
