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Wednesday, Sep 29, 2004

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Consumer durables becoming dearer this festive season

Neha Kaushik

New Delhi , Sept. 28

CONSUMERS accustomed to a slash in prices of refrigerators, CTVs, ACs and other appliances around this time of the year, just before the festive season, may be in for a disappointment.

For not only have a few industry players announced price hikes, the overall price erosion in the category seems to have also largely halted.

Electrolux, for instance, has announced an upward price revision of about 3-5 per cent across its products including refrigerators, air-conditioners and washing machine categories.

Samsung India too is planning to increase the prices of its refrigerators by about 4-5 per cent over the next few weeks, a company official said.

LG Electronics, meanwhile, has already put into effect a price increase across its product range about a month ago.

"The prices of our refrigerators have gone up by around 4-5 per cent and colour TVs by 3-4 per cent," said Mr Salil Kapoor, Head (Marketing), LG Electronics.

The reason for these price revisions primarily lies in the industry's bottomlines being affected due to increased input costs and higher duties. Costs of key materials have gone up by almost 20 per cent in recent months.

"Even as input costs have gone up by a substantial margin, Electrolux India is not passing on the added burden to the customers. The revision is only to allow Electrolux India to service its customers with the same highest standards," said Mr Ajay Kapila, Head (Sales & Marketing), Electrolux India.

An official from the Consumer Electronics and Television Manufacturers' Association (CETMA) added that while input costs have been putting pressure on margins, the tax element on these products is also very high.

In fact, a recent study by ICRA pointed out that there has been a downward trend in the average sales realisations on white goods, namely refrigerators and washing machines.

The high increase in cost of sales resulted in a decline in operating profits and operating margins.

According to the study, the net margins for the white goods sector have turned negative since the financial year 2002.

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