The Hindu Business Line : Cool and upbeat

Godrej’s Appliance Division is aware of the competition but is confident in its knowledge of the Indian consumer. The company has also added zing to its products and marketing.

The Godrej factory at Shirwal, Maharashtra

Sravanthi Challapalli

Kiwi Green, Melon Red, Icy Blue … If the colours of its appliances were to indicate the mood at the company, they would say Godrej is upbeat. Going hand in hand with that sentiment is the awareness that it faces a challenge - the usual one most other brands with a hoary heritage face – that of contemporarising its image.

Godrej had been relatively quiet when it came to speaking to the media and also refrained from buffeting the media with its ads. However, both situations are changing at Godrej’s Appliance Division. The company is all set to accelerate business, considering it has been able to hold its own against global giants who have a presence in India. “Who knows the Indian consumers as well as we do? We make products that contain technology relevant to them, which will touch their heart and soul,” says George Menezes, Chief Operating Officer, Appliance Division. He adds, “We’re being different on a scale where the majors cannot compete with us,” he says.

At its offices in Mumbai and Shirwal (near Pune), an exhibition room proudly shows off several colourful refrigerators and washing machines made there. The innovation and customisation to Indian tastes goes deeper than colour. The EON range of frost-free refrigerators has won an award for the best design for its ‘Seven Wonders’ – the ‘Cool Shower Technology’ that allows the cooling to evenly pervade the fridge through holes in the shelves even when it’s loaded, a hook in the freezer/chiller which one can hang milk or other stuff brought in a polythene bag – and the washing machines with their Dynamic Aqua-Power Control Technology have been designed to monitor power and water supply and wash accordingly.

The Appliance Division also makes microwave ovens and DVD players. It’s all set to launch a pilot project for colour televisions in mid-2008 (a category that will help it instantly scale up the size of the domestic appliances business), and add capacity to respond faster to demand in the peak season. “Our challenge is to change the 60-year-old mindset,” Hussain A. Plumber, General Manager (Quality), Appliance Division, Godrej, tells a group of mediapersons from Chennai visiting the factory.

Godrej, unlike many other rivals, is not operating in all the categories but plans to launch more high-end models now. It is investing Rs 100 crore in a new line to make 2.5 lakh more refrigerators at the Shirwal plant to increase its total refrigerator capacity to 18.5 lakh units per annum.

As of now, this plant can make six lakh refrigerators and its Mohali facility, 10 lakh units. For the appliance division, refrigerators contribute 55 per cent of the topline sales, which, this year, Godrej expects will be Rs 1,400 crore. The company has a 20 per cent market share in this segment, compared to LG and Samsung which have 24 and 23 per cent. In air-conditioners, the company aims to increase market share to 10 per cent from 7 per cent. In washing machines, its share is 8 per cent and in microwave ovens, seven per cent.

Says Ramesh Chembath, General Manager (Marketing), Appliance Division: “In the last two years, we have been focusing on offering relevant technology and being more visible in the media. We have invested Rs 30 million in market research. Five per cent of our turnover is spent on R & D and seven per cent of it on promotion.”

Godrej recently set up a new R & D centre which employs over a 100 people at its Vikhroli township in Mumbai. “We have plans for every month till the year 2011. Every six months, there will be something new, at least a variant if not a product itself,” says Chembath. This multigenerational product planning has seen Godrej launch 104 products in the last one year. Every category the company is present in saw the introduction of new technology, says Chembath.

Not just a refrigerator company!

Answering a query on how Godrej, an Indian pioneer in cooling, could have been left behind in the numbers game, Chembath says that companies such as LG and Samsung entered with a slew of products. Godrej is attempting to remedy that now, and while its focus is on achieving the top position in the refrigerator and AC markets, it doesn’t want to be known as just a refrigerator company.

To that end, marketing and brand-building have been spruced up. Says Kamal Nandi, Vice-President (Sales & Marketing), Appliance Division, “There was a disconnect with youth, who saw it as their parents’ and grandparents’ brand. So we went retro, which is in now, and gave our products the rounded finishes and looks of the Sixties. We are also making products that young consumers are savvy about – such as the ‘microsteam’ microwave ovens that we are targeting at the health-conscious people.”

Godrej is also very proud about going colour in its appliances, claiming it’s the only Indian company to do so — India is the only market to go in for coloured refrigerators and washing machines, they say. The company is following a two-tier brand strategy – Eon, present in various appliance categories, will be its premium brand, while the mass ranges would comprise sub-brands Pentacool, Axis and Godrej.

The company has also gone in for umbrella branding. Its latest campaign has actor Preity Zinta come back home to an apartment kitted out with various Godrej appliances. A couple of years ago, the company even started a direct selling force which serves more as a good means of customer contact than as a sales opportunity.

To own the cooling space, where it has pioneered technology such as PUF and five-side cooling Godrej is taking several steps. It is planning innovative launches in the direct cool segment where it has a relatively small presence now. It aims to grab 10 per cent market share in the AC market. There are plans to enter commercial cooling and chilling segments (and small kitchen appliances). It is mulling using composite materials for refrigerators that are better finished and will be less vulnerable to handling damages.

In fact, one of the sights at the Shirwal factory is a couple of refrigerators bobbing up and down on a vibrating platform – the officials explain that it’s a ‘shipping test’ to simulate the progress of the container vehicle as it makes its way across the country’s largely bumpy roads, and that they are left that way for about eight hours. There’s also a salt spray chamber in which the appliance is left for about a month, to test for rust, something appliances in the coastal regions are prone to. There is an energy test laboratory and temperature-controlled rooms to monitor the appliances’ performance in various climatic conditions – humid, hot and cold.

Godrej boasts four-star energy-efficiency rating for its appliances. That’s another area of focus for the company, and one where it has to be abreast of the competition. Godrej claims to be the only refrigerator company in India that has made its entire range CFC-, HCFC- and HFC-free in a one-stop phase-out of CFCs under the Montreal Protocol.

Says Francis Xavier, Managing Director of Chennai-based market research company Francis Kanoi, “Godrej has done well in the last two years. It is a lot more serious in the market place now, but the market is intensely competitive and Godrej will have to keep on with innovations and aggression for some years, if they have to get within the range of the leaders.”

On its foray into CTV manufacture, which has created ripples in the market, he says it will be a tough task to make a dent there. Elaborating, he says: “If Godrej has to do well in the CTV field, it needs to compete with LG, Samsung, Onida, Videocon, Sansui and the like. The field is in a well-set position now unlike 10 years ago, when it was more open. If it succeeds, then it will be an outstanding effort. Its refrigerator distribution and the credibility of the Godrej name will be its advantages. On the other hand, LG, Samsung, and some other companies already have a larger distribution and an established name in the consumer electronics field.”

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