The Hindu Business Line : White goods set for 5-7% hike

On the other hand, players such as Samsung India and Godrej Appliances have decided to hold prices of products like air-conditioners as it’s their peak sales season.

R. Ravikumar
T. Murrali

Chennai, May 22 Triggered by the increasing steel, copper and petro product prices and also by the weakening rupee in the last few weeks, prices of white goods are set to witness 5 to 7 per cent rise soon. .

In the last three months, flat and long steel products witnessed an increase of 25 per cent. Moreover, price cuts by steel manufacturers last week failed to cheer white goods manufacturers as it has not impacted prices of specific grades of alloy steel, largely used by the industry.

While the shell of any gadget is affected by escalating steel prices since it is being fabricated locally, the core of the machine such as compressors, motors and related aggregates has taken a beating due to weakening of the rupee.

Durable majors such as Samsung, LG Electronics and Godrej increased prices by 1 to 3 per cent in March this year. As the weakening rupee adds to increasing input costs, some of these players are again planning to increase the prices of their products across categories by another 5 to 7 per cent.

According to Mr V. Ramachandran, Director (Sales and Marketing), LG Electronics India, most of the top-end models of its washing machines, refrigerators and air-conditioners are imported as CBUs (completely-built units) or SKDs (semi knocked-down kits) and assembled here. As there has been almost a 9 per cent swing in the rupee value against the dollar in the last few weeks, the landed cost of these products could go up as much.

Imported components

“Apart from that, most of our products have 10 to 20 per cent imported components. For every one rupee swing in the currency value, there will be at least 0.65 per cent correction in the cost price of these products. As we cannot absorb this entirely, we have decided to increase the prices of these products by 4 to 7 per cent, almost with immediate effect,” he said.

Industry sources say the percentage of imported components may vary in different brands , but there is at least more than 5 per cent of imported components in products across categories — be it microwave ovens, refrigerators or air-conditioners.

Onida, another major player in the white goods segment, is also proposing a 5 to 7 per cent hike in prices across product categories. According to Mr S.K. Jain, Head (Sales), Mirc Electronics, though the company did not effect any price correction early this year, it is now under tremendous pressure and cannot do away with price correction.

Holding prices

On the other hand, Samsung India and Godrej Appliances have decided not to increase prices for the time being. Says Mr Ravinder Zutshi, Deputy Managing Director, Samsung India, “We increased the refrigerator prices by around 3 per cent early this year (in March). And, we have decided to hold the prices of other products such as air-conditioners for the time being as this is the peak sales season.”

Godrej also increased the prices of its products including washing machines, microwave ovens and refrigerators by 3 to 4 per cent in March this year. “We have no immediate plans to increase the prices,” said Mr Kamal Nandi, Vice-President, Sales and Marketing, Godrej Appliances.

Crude rise

Apart from the rise in steel and copper prices, the price rise in petro products also adds to the manufacturing cost of products such as refrigerators, which require polyurethane foam for the lining .

These players were able to absorb this to an extent as the rupee was strong till March. Now, with the rupee also weakening, all of them are reeling under tremendous cost pressure and hence may resort to price correction in another few weeks.

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Consumer durable firms feel the heat of rising steel costs

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