The Hindu Business Line : Consumer durables sector ends year on a high note

IT'S been a good year for the consumer durables sector, which saw a good run on the bourses as well as a sizable jump in demand towards the latter half of the year. In fact, the sector outperformed most others on the stock exchanges this year. The BSE Consumer Durables index increased by a massive 114.34 per cent.

Though the index had remained more or less flat in 2004, industry watchers point out that the surge this year has been led by buying interest in companies such as Titan Industries and Videocon. Blue Star and Voltas too have seen a fair amount of interest this year. "The steel prices had softened somewhat in 2005, thereby helping companies operating in this segment improve their margins. In addition to growth in domestic demand (primarily in the latter half of the year), exports are also increasingly accounting for a chunk of total sales for consumer durables and electronics companies. In fact, companies such as LG Electronics, Samsung, and Voltas are already exporting significant numbers from India," an analyst said.

Meanwhile, the recovery in sales seen in the second half of 2005 is set to have the consumer durables industry end with a comfortable growth of 7-9 per cent in the year.

According to industry data, Colour TV sales grew by 11.8 per cent in the January-October period, refrigerators by 4.2 per cent, washing machines by 16 per cent and microwave ovens by 115 per cent. "The month of November too had been good for the industry. CTV sales have been slow in December but that is primarily because of the huge sales in October and November and also a higher base last year. The month, however, has been good for home appliances," points out an industry official. The growth in all categories has been driven by the high-end segment, with flat CTVs and frost-free refrigerators driving sales. Market analysts point out that the sector was hit in the first half of the year due to uncertainties arising out of the implementation of VAT and incessant rains in key states, however the pent-up demand resulted in huge sales during the festive months of September-November. Categories such as CTVs, and washing machines are estimated to have grown at upwards of 25 per cent during this period.

Meanwhile, the sector also saw action, led largely by the Videocon Group, on the M&A front.

Videocon made the largest overseas acquisition by an Indian company this year with the purchase of the colour picture tubes business of French major Thompson for Rs 1,260 crore. This was followed by the acquisition of the Indian subsidiary of AB Electrolux of Sweden, Electrolux Kelvinator.

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