Japanese consumer electronics major Panasonic has invested Rs 450 crore in expanding its manufacturing facilities in India in the last three years under the ‘Make in India’ programme.
Japanese consumer electronics major Panasonic has invested Rs 450 crore in expanding its manufacturing facilities in India in the last three years under the ‘Make in India’ programme and intends to make the country an export hub for South Asia, West Asia and Africa. The company’s president & CEO for India and South Asia Manish Sharma in an interview with FE’s Rishi Ranjan Kala said the focus in India is on reaching more small towns with the company working on expanding its exclusive stores to 300 by 2018-end. Excerpts:
What are your plans for Make in India? At present, what is Panasonic’s status in terms of local production/manufacturing unit in the country?
Over the last three years our manufacturing focus has seen a significant strategic uptake with investments of Rs 450 crore. This change has been brought about by the positive policy ecosystem in the country, which is now significantly focusing on domestic manufacturing and the global corporation’s strategic intent on establishing India as an export hub for its ISAMEA (India, South Asia, Middle East and Africa) region. In April this year, we started manufacturing refrigerators at our Technopark facility in Jhajjar, and now 95% of all our consumer products are locally manufactured. Further, we are looking at expanding our manufacturing focus towards B2B segment as well, wherein we will start producing security cameras and video door phones.
How Panasonic intends to target Indian market for brand visibility, sales and brand recall?
Our strategic intent over the past few years has been to expand our reach to include small towns and cities. We are focusing on our presence across 450 cities and are also looking at doubling the number of exclusive brand shops by adding 150 new exclusive stores and expanding total stores to 300 by the end of 2018. For brand visibility and recall, our above-the-line marketing (ATL) and below-the-line marketing (BTL) spends would be around 10% of the total revenue.
What has been the strategic intent behind development of your consumer products? What is the future of vertical?
Today around 80% of our business is derived from the consumer segment, whilst the remaining comes from B2B. TVs are the largest component, followed by ACs and washing machines. In recent times, refrigerators have thrown open immense prospects with our recent set up of its manufacturing facility and are expected to act as a catalyser in the years ahead. Under our consumer business, we are focused on creating an ecosystem of smart connected, high performance and energy-efficient products. This perspective resonates across all our product categories. The development of Arbo Hub as a platform within smartphones as an AI assistant is also in line with this thought and helps improve user interface and enhances the manner in which consumers interact with their devices. Our smartphone business is aligned with our strategy to build an ecosystem of connected products and to act as a hub for future developments along with its IoT platform.
With telcos encouraging subscribers to upgrade from feature phones to smartphones, how do you view the Indian market in the short, medium and long term?
The rate at which consumers are adopting new technologies in their daily lives and looking for more is a positive sign for the industry. The market has evolved at a rather fast pace and the main reason for this is the aspiration to own the latest available technology. Market dynamics are also changing rapidly and we are looking at a situation where device specifications may saturate in the coming time. There will be a situation where ‘experiences’ will play a major role. To ensure our consumers enjoy the best user experience, we invested in building an AI-backed buddy ARBO.
With the rupee weakening to record lows, companies are looking at passing the burden to the consumers. Would you too pass on the hike?
Strengthening of the dollar has put pressure on inputs costs, raising commodity prices especially crude oil. With the continual rupee fall, there has been a near 10% rise in costs for the consumer durable industry. While we have been absorbing the increased cost in the past, we will be passing on 5-7% increase to the consumers post-festive season while absorbing the rest.