Hot summer: Fridges, ACs to cost more

On the back of an increase in excise duty and raw material prices, consumer durable companies such as LG, Voltas, Samsung and Godrej & Boyce began increasing prices of refrigerators and air conditioners (ACs) from today.

Consumers may expect an increase in prices by around three per cent across all brands and price ranges.

Samsung India increased the prices of its refrigerators by about Rs 1,000 today and would raise those of its ACs next month. Market leader LG Electronics would increase prices from tomorrow.

“With excise and raw material prices shooting up, and an increase in the CVD (countervailing duty) by another two per cent, the increase in prices is inevitable,” noted Pradeep Bakshi, vice president, sales, Voltas India.

Consumer durable firms do not believe the price rise would affect sales. They feel there is huge scope for growth, with the segment already growing at a compounded annual rate of around 25 per cent.

LG says it would talk to other players to request the government for a relaxation in the duty.

The increase in excise duties by two per cent that was announced by the finance minister in this year’s Union Budget was the main cause for companies in the consumer durables market to increase prices. There was also a simultaneous increase in raw material prices of copper, aluminum and steel.

“Depending on the volatility of the commodity market, we may or may not introduce new schemes this time,” said Ajay Bajaj, business head–air conditioners, LG India.

Meanwhile, the widening of tax slabs, especially that on the middle income group (Rs 1.6 lakh to Rs 5 lakh), announced in this Union Budget, makes the companies in question optimistic. “Even though there are increases in taxes, the widening of tax slabs has led to more disposable income with the consumers. Therefore, purchasing power would remain the same, if not increase,” said Bakshi.

Panasonic was the only major player in the market to decide on delaying any price increase. The company said their existing inventory would continue at the same price and they would look at an increase in the first week of April. “An increase in sales of durables in rural and semi-urban markets have also relaxed a lot of worries for the industry, as the tax slab that has been widened the most comes from these markets,” said Manish Sharma, head of marketing, Panasonic India.