TV, fridge, washing machine to cost more

Makers of consumer durables have increased prices for the second time in two months, thanks to a falling rupee.

LG and Samsung, the number one and number two companies in the market, have taken up prices between two and five per cent for home appliances such as refrigerators, washing machines and microwaves this month. Videocon, which is third, will take a price rise of seven to eight per cent from December 1.

These rises come on the back of increases in September, when the rupee had depreciated by nine per cent in a month. At that time, the top three had raised prices between one and five per cent on home appliances.

 

Flat panel television sets, which see import of panels and chipsets, were excluded from the September price rise on account of the festive season, when offtake of audio-visual products was high. Most companies have opted not to touch flat panel TV prices in the current round.

Samsung has raised prices of mobile phones by three to five per cent. A Samsung spokesperson said almost all its smart phones were imported and, hence, taking up prices was inevitable, owing to the rupee’s volatility.

From July to now, the rupee has depreciated by 18 per cent against the dollar, trading between 51 and 52 at the moment. It continues to show a downward bias, and is unlikely to ease soon, say market analysts

Most durables manufacturers are not expecting a respite from a falling rupee any time soon. "We are keeping an eye on the currency movement. We are likely to review the situation in January as far as price hikes go,” said Ravinder Zutshi, deputy managing director, Samsung India.

Pradeep Dhoot, group president, Videocon Industries, echoed a similar sentiment. "December will be an important month from the sales point of view, especially in the south. Taking up prices again next month may not be prudent," he said. Typically, the southern states see momentum around Christmas and the New Year. "If there is consumer momentum, we can safely say they have absorbed the price hikes taken," said Zutshi.

The current financial year hasn't been the best for consumer durables players, with most seeing demand impacted on account of inflation and interest costs. Though the Index of Industrial Production (IIP) numbers for September showed a growth of 8.6 per cent in consumer durables, it was in lower single-digits in the previous month.

IIP is an indirect indicator of consumer demand.

While most consumer durables companies expect the IIP to show good growth in October, owing to the festive period, November is likely to be weak.