Mobile handset devices also likely to become costlier

Hit by a depreciating rupee against the US dollar, PC, laptop, tablet-makers and mobile handset vendors are mulling a price hike. This is over and above the 6-10 per cent price hike in July.

Since majority of IT hardware is imported, volatility in foreign exchange affects the bottom-line of these companies.

Prices of computers went up in July to accommodate devaluation of Indian currency up to Rs 61 a dollar. As rupee now slid beyond Rs 63, the hardware industry is feeling the pinch. A call on price revision may be taken by this month-end.

“We will wait for some more days before taking a call on raising prices. But yes, we are mulling another round of price rise,” S. Rajendran, Chief Marketing Officer, Acer India, said.

Kunal Vora, Telecom and Media Analyst at BNP Paribas Securities India, admits that the possibility of price hike is looming large. However, he cautions that most companies may prefer to wait for “some more time” to take a long-term view on rupee.

Apparently, the companies having larger inventory of finished products would get more time to decide on price hike.

Sources say inventory position with different computer makers vary from two weeks to two months. Companies need to liquidate existing stocks before new realisations come in.

Volatility in rupee

Considering the volatility in the rupee and fears of a further slide in currency, the industry is unlikely to recover margins.

According to Alok Bharadwaj, Executive Vice-President, Cannon India and former President MAIT (Manufacturer’s Association for Information and Technology), the decision that needs to be taken is at what point and by how much should prices move up.

“It’s too volatile to take a call now. I don’t know by how much I should hike prices. If the rupee further depreciates (from the Rs 63-mark) then it is unlikely for me to recover margins even after another round of price hike,” Bharadwaj said.

Mobile Phones

Price of mobile phones is likely to go up as a result of the steep fall in rupee value.

Many of the local mobile firms, which source their products from countries such as China, make payments in dollars. Hedging is done on a monthly basis. The price range could be up to 8 per cent depending on the pipeline of inventory and the model.

“We are going to increase the handset prices in the range of 6-8 per cent. The hike would come into effect in the next few days,” Y. Guru, Chairman and Managing Director of Celkon Mobiles, said.

Karbonn, another leading handset player, said it is not doing it in the immediate future as prices were hiked (by 7-8 per cent) last month. “It will all depend on the rupee fluctuation,” a company spokesperson said.

Samsung, on its part, said that it was also watching the situation.

(With inputs from K.V. Kurmanath in Hyderabad and S. Ronendra Singh in New Delhi)

(This article was published on August 20, 2013)
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