Durable cos reap local sourcing benefits

Written by Mona Mehta | Mumbai | Updated: May 12 2009, 04:15am hrs
Branded consumer durable makers are witnessing an increased indigenisation of local sourcing, the benefits of which they have been able to pass on to consumers in the form of stable product prices this season.

Says Ravinder Zutshi, deputy managing director, Samsung India, Indigenisation of local sourcing constitutes 60% of most of our home appliance (HA) products. The process of indigenisation is still ongoing so that we are able to pass on the price benefits to customers. Since Samsung branded appliances and components are manufactured locally, we do not feel the immediate need to hike prices, but instead will look at passing on the benefits to consumers.

In first quarter, the company recorded a growth of around 25% in washing machines and over 20% in ACs. In the second quarter, based on its new product introductions in the washing machine category, it expects a growth of 25-30% and in ACs, and is expecting a jump of 40% in sales over last year.

V Ramachandran, director- marketing, LG Electronics told FE, We will not hike product prices immediately, but will launch new technological products at value-for- money pricing.

Kamal Nandi, vice president sales and marketing, appliance division of Godrej & Boyce told FE, We will look at how the commodity prices fares in the next three months. Depending on the market conditions, we will take a decision later regarding hiking product prices. However, immediately we are not considering a price hike.

The Rs 20,000 crore consumer durables sector grew by 10% in Q4 2008-09, as compared to 12% growth reported during the previous corresponding period. Durable manufacturers believes that in this quarter the demand for ACs and refrigerators sector is growing at the rate of 10% to 15% and is expected to grow further, whereas, the colour televison sales has been flat as April is usually considered the lean season for the product.

Suresh Khanna, secretary general, Consumer Electronics And Television Manufacturers Association (CETMA) told FE, Recently, durable manufacturers have held discussions with CETMA on issues related to product prices.