Godrej Appliances anticipates its premium segment to increase sales turnover by as much as 20% in the upcoming fiscal year. It will close the current fiscal at Rs6,000 crore in revenue — a 19% year-on-year growth against industry growth of 8% — business head and executive vice president Kamal Nandi told FE.
“The mass segment still remains under pressure and I expect another couple of quarters before it starts coming or taking speed along with the premium segment,” he said. About 45% of the company’s revenue at present is coming from the premium portfolio across categories, which it plans to expand to 55% in the next two years. “With the rising disposable income and younger target groups entering the premium segment with easy access to finance, the segment will continue to grow,” he added.
The company expects at least a 20% growth in sales of ACs and refrigerators during the upcoming summer season. The company has grown 100% in the air-conditioners (ACs) segment last calendar year and hence it remains the biggest revenue contributor, Nandi said. While the current revenue from urban (metros and tier-1 cities) geographies for the company remains at about 38%, he added that the same will cross 40% in the upcoming fiscal based on the growing demand for ACs. “Even amid the inflationary trends, this segment will not be impacted as it remains urban-led consumption. Moreover, the penetration level for ACs is the lowest today amongst all the categories— it is only about 10%- 11% vis-a-vis refrigerators at 40% and washing machines at 21% to 22%,” he noted.
Over the past few years, the appliance maker has expanded its AC portfolio from one tonne to up to two and a half tonne and has also experimented with AI/ML-based appliances. However, the demand for tech-based products with IoT remains small, Nandi added. “The challenge today is the infrastructure. A very limited number of homes have it to support this sort of product feature. I don’t see that trend happening in Indian homes. Over a period of time, this will gain momentum,” he said.
Nandi also said that Godrej Appliances would not change product prices until June, as inflationary trends and the Red Sea turmoil, which have diverted global shipping routes, have not influenced input and supplier costs so far. “The commodity has been more or less stable; for some time, there has been little hardening of a few of the commodities like copper. But on the other side, the rupee-dollar equation is favourable—it’s sort of balancing as of now. At least in the next (summer) quarter, we will not take any price hike. Most of the raw materials that we had to procure have already happened for the quarter. The company will only evaluate the situation post-summer on the price hike,” he said.
In terms of ramping up its distribution might, the company added 3,000 new outlets this year and is planning to add another 3,000 to 4,000 new outlets next fiscal. E-commerce contributes about 8%-10% to its total sales. Currently, the company has an annual capacity for one million washing machines, 3.6 million refrigerators and one million ACs.