Godrej Appliances targets 25% revenue growth to nearly Rs 50 bn in FY19

The company expects the air conditioner segment to be a growth driver and aims to increase its overall market share in the segment to 8 per cent from 5 per cent at present

Godrej Appliances, the consumer durables division of Godrej Group, is targeting a 25 per cent revenue growth to nearly Rs 50 billion in 2018-19, on higher demand expectation, according to a company official here.

"We should be close to Rs 40 billion this financial year. We will be targeting a 25 per cent growth next year, at close to about Rs 50 billion," Godrej Appliances business head and executive vice president Kamal Nandi told PTI here.

"I expect 2018 should be better, because the challenges that we faced in 2017, with both demonetisation as well as GST implementation, the overall industry should be growing and demand should be better. We definitely expect that the GST rate change will happen soon from 28 per cent to 18 per cent and that should propel the industry growth," he added.

The company expects the air conditioner (AC) segment to be a growth driver and aims to increase its overall market share in the segment to 8 per cent from 5 per cent at present.

The size of the AC market is estimated to be 5.5 million units growing at a compounded rate of 20 per cent. However, the penetration levels of AC is merely around 3.6 - 3.7 per cent in the country, according to industry estimates.

Air conditioners currently contribute to around 20 per cent of the company's revenues and are likely to increase to 21 per cent FY19.

Nandi noted that the tier I to tier IV cities are driving consumption and with the rural-focused budget, the states with more agri-economy are likely to fuel demand.

"Budget will favour agriculture economy and we can expect consumption to go up in places like Punjab, Odisha, Tamil Nadu, Maharashtra, Assam. Our expectation is that tier I to tier IV cities will grow faster than metros in the coming years," he said.

He also noted that consumption of premium products in tier I to tier IV cities is the highest.

"Our exclusive brand outlets (EBO) set up is also in tier I to tier IV and not in metros. We have 79 EBOs at present and this financial year we will take it to 84. In FY18-19 we should have 125," he said.

Metro consumption is around 12 per cent, rural at 35 per cent and balance is from tier I to tier IV cities, he elaborated.