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Consumer durable majors bid to fix region-specific problems

Richa Mishra

New Delhi , Feb. 12

THE consumer electronics and durables industry is now tackling the issue of uneven growth experienced within the four regions of the country. The industry has initiated a debate to address stagnation and region-specific problems, a Consumer Electronics & TV Manufacturers Association (CETMA) official said.

The market condition is largely determined by demographic behaviour and differential tax regimes across States. The colour television category is expected to clock sales of 9.5 million units in 2004, up from eight million units in 2003. For refrigerators, the industry is targeting a growth of 3.85 million units, up from 3.5 million units, while for washing machines the industry is hoping to record a sale of 1.5 million, up from 1.4 million units during the previous year. In the microwave oven category, the industry is targeting a growth of 2.75 lakh units, up from 2.4 lakh units in the previous year.

The flat TV category and the frost-free refrigerator segment are where the industry expects to maximise growth. In fact, the Flat TV category is expected to grow from 12-13 per cent to 20 per cent. To attain these figures, players need to address some macro issues, industry representatives said.

"To examine the problems faced by the industry in each region and the factors that can push growth, we have started brainstorming sessions among players," the CETMA official told Business Line. The first of such sessions was held in Chennai last December followed by another in Mumbai this January.

Elaborating on some region-specific problems, the official said, "West zone has been experiencing marginal negative growth compared with the North. The reasons for this includes the fact that products are more expensive in the West zone due to higher sales tax."

When compared with the growth of around 10 per cent in the Northern market for washing machines and over 25 per cent in the microwave oven category, the West zone recorded marginal growth in washing machines and less than 20 per cent in microwave ovens. In the CTV category, West zone experienced a growth of 12 per cent as against a 17 per cent growth experienced by the North.

In the North zone, the issue of capacity fragmentation due to exemptions enjoyed by units set up in Uttaranchal and Himachal Pradesh is a concern. Earlier, companies used to have one plant manufacturing more than a lakh units but due to these sops, they have set up more than one plant, leading to economies of scale and quality being affected. The industry has been trying to address these issues and logistical problems. Consumer electronics (CTVs and ACs) are not a priority when compared with the home appliances category in the Southern market. The lowest penetration, however, is experienced in the East. It is necessary to maintain a healthy relationship between industry and trade, as trade is an interface between industry and consumer, the CETMA official said.

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