|
| Slowdown blues upset FMCG companies' plans |
| Viveat Susan Pinto / Mumbai Sep 07, 2011, 01:34 IST |
|
The Indian consumer durables industry has seen a slowdown in growth over the last few months and industry players are not counting much on the upcoming festive season.
However, some companies are expecting a 25-30 per cent rise in sales – down from last year’s estimates of 40 per cent – during the festivals to revive their fortunes.
According to the Index of Industrial Production (IIP) data, for the first quarter of the current financial year growth in consumer durables output was in single digits, against the double-digit growth registered last year. In June, the growth rate was down to one per cent from 21.2 per cent in the year-ago period.
The trend is no different for April and May — down to 3.8 per cent and 5.2 per cent from 23.3 per cent and 14.7 per cent, respectively, in the previous year.
While July and August IIP numbers are yet to be released, the trend, say industry experts, is likely to be no different. “IIP numbers are an indirect indicator of consumer demand. If demand is good it does tend show in better output numbers,” said Rajeev Jain, chief executive officer, Bajaj Finance, the largest consumer durable financier in the country. “The fact that output growth has been low indicates that consumer demand is not too strong.”
Unlike previous years when the consumer durable industry records good growth figures during summer, sales of air-conditioners and refrigerators remained flat in the first quarter of this financial years. Industry insiders said close to 30-35 per cent sales takes place during the summer alone, but this year it is bound to put pressure on companies to perform during the festivities — starting with Onam (September 9) to Diwali (October 26).
Most companies admit they are going into the festive period with a sense of caution. “Like most, we are gearing up with freebies and offers for the festive period. But I am keeping my fingers crossed,” said George Menezes, chief operating officer, Godrej Appliances.
With inflation at elevated levels and the likelihood of another round of rate hikes by the Reserve Bank of India on the cards, consumer durable companies are worried.
Ravinder Zutshi, deputy managing director, Samsung India, said: “The twin issues of inflation and interest costs have hit consumer sentiment, which is why it has been a bit of a struggle this year.”
Echoing similar views Shantanu Dasgupta, vice-president, corporate affairs & strategy, Asia South, Whirlpool India, said: “While consumers will make purchases this year around the festive period. It is likely to be a little less buoyant than last year.”
India's largest consumer durables manufacturer LG said much depends on how much bonus salaried people get this year.
“That goes a long way in determining how much they are ready to spend. While we expect the festive period to be good, these factors would have to be borne in mind,” said Y V Verma, chief operating officer, LG India.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
