Flat demand may force durable companies to put off price hikes

Mumbai, Nov 17 | Updated: Nov 18 2005, 05:34am hrs
A near flat demand of just 5% in the first half of 2005 has forced consumer durable manufacturers in India to put off any plans to hike prices in early 2006. Instead, they are focusing on increasing local production of components to keep costs in check.

Durables manufacturers normally hike prices by 5%-10% every year to balance the higher costs of inputs and logistics costs. Leading durable makers, however, told FE they would keep the prices of goods stable, and would look at cutting production and logistics costs to offset rising cost of inputs.

LG Electronics India, vice president, Girish Bapat said, LG is looking at manufacturing components in India for its entire products range. If that happens then prices of products will stabilise to a certain level instead of rising. LG produces 75% of its electronics, and, 90% of its appliances in India.

For its mobile phones, LG also plans to develop localised vendor base in India. Electrolux Kelvinator India Ltd too is planning to implement in-house production of components at its Nagpur and Rajasthan factory which will generate cost advantage to the extent of 5-10% for all its products, added its managing director, Anirudh Dhoot. Meanwhile, Mirc Electronics isnt commiting it wont hike prices. Its worried that the rising dollar and the weakening Rupee may force it tohike prices by 5% the next one month.

On The Backfoot

Flat demand of just 5% has forced consumer durable manufacturers to put off
plans to hike prices
They are focusing on increasing local production of components to keep costs in check
Durables manufacturers normally hike prices by 5-10% every year to balance the higher costs of inputs and logistics costs