The Hindu Business Line : Spate of high-end gadgets spurred durables’ growth

New Delhi, Dec. 31 The consumer durable industry was on a high growth trajectory this year. Durable makers of all hues zealously wooed the rising consuming class with their offerings, each trying to outdo the other in branding, products value engineering innovations and pricing.

The year saw a spate of high-end launches both in consumer durables and electronics. While the preferences seemed to tilt toward user-friendly high-end gadgets, the entry-level models too are becoming more accessible for the consumers at the bottom of the pyramid.

In terms of product category, the consumer durables market can be categorised into consumer electronics comprising television sets, audio systems, VCD players and others; and appliances referred to as white goods, which includes washing machines, microwave ovens and air-conditioners.

According to Mr R. Zutshi, Deputy Managing Director, Samsung India, “The main strategy for Samsung in the year 2007 has been to reach out to a bigger base of consumers, both in the metros and non-metro markets through our products and marketing/communication strategies. In terms of products, our thrust has been on product customisation for the Indian market. Product innovation is not being confined to the top end of the market. We are providing superior technology, differentiated products even in the mass segment.” LCD and plasma televisions too made a splash. Market leaders such as Samsung, LG and Sony had dedicated offerings for the consumers. The category also saw the growth of the home theatre segment.

Despite the rising rupee the industry grew in almost every segment, according to the Consumer Electronics and Appliances Manufacturing Association. “The customs duty on finished products is an impediment to the sector’s growth. And to top it the appreciating rupee may be a setback. Companies like Samsung and LG which have invested heavily into the sector may be at a disadvantage,” Mr Anoop Kumar, President, said.

Noting that Indian exports have become uncompetitive in the global market due to these elements, he said companies’ plans to make India a global sourcing hub may suffer a setback.

Another disadvantage that the companies faced is due to the removal of additional four per cent duty on imported finished products. This put at a disadvantage the entire domestic industry as well as multinational companies which have invested in India heavily. Consequently, domestic manufacturing has become more expensive than importing and the industry is being hit from two sides.

Rural demand

It was not just the urban but also the rural areas that saw increased demand. Companies fine-tuned their strategies to accommodate changing market dynamics. Rural India accounts for nearly 70 per cent of the total number of households but still the penetration of refrigerators is less than two per cent and washing machines just 0.5 per cent. This offers huge scope.

According to Mr Sunil Mehta, Joint Vice-President, Videocon Industries, “The consumer durables industry is growing at about 10-12 per cent. Penetration of consumer durables is still very low and this market is the one that almost all players are targeting.”

Another noticeable trend was that the replacement market for consumer electronics, especially televisions, grew extensively, with the improvement in the technology and the reduction in their cost.

Customers were wooed with superior technologies such as steam microwave, frost-free refrigerators, fully-automatic front loading washing machines, split air-conditioners and LCDs.

According to Mr Rahul Sethi, Managing Director, Kitchen Appliances India Ltd, “If the present growth in the microwave ovens category goes on, then the industry will stand on a strong wicket. People are more open to experimenting,” he said, adding that customisation and product innovation were the keys to survival in the sector.

Investment line-up

Investments poured into the consumer electronics and durables segment. Samsung India lined up a $500-million investment for a new LCD manufacturing unit in Sriperumbudur near Chennai. Air-conditioning and refrigeration major Carrier Corporation said it would invest Rs 200 crore in India during the next three years to build a new global research and development centre, develop industry-leading products and technology for local markets and significantly enhance the company’s manufacturing operations here.

Air-conditioning major Fedders Lloyd Corporation Ltd and Victor Company of Japan (JVC) would be jointly investing $30 million to create space for JVC products in the Indian consumer electronics market as well.

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