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The Index of Industrial Production (IIP) may be suggesting a slowdown in the manufacturing sector, but durables manufacturers and retailers say the concern is unfounded. However, industry trackers feel that the actual impact can be assessed only during the festival season starting mid-August.
IIP numbers
IIP numbers indicate a dip in growth of manufacturing sector from 8.9 per cent in 2010 to 5.6 per cent in May 2011. “As far as the consumer electronics and home appliances industry is concerned, no slowdown effect has been felt. However, the decline in demand for air-conditioners has been due to seasonal effect, that is, early rains, rather than any recessionary trend. Consumer behaviour has changed drastically in the last five years. Earlier, the buying pattern peaked during festivals, and specific events like the World Cup. Now there's impulse buying,” Mr K. S. Raman, Director, Next Retail, a consumer durable retailer, said.
Similar views were expressed by durables manufacturers.
“So far, the trend has been stable and the offtake is healthy. The pick-up momentum can be assessed only during the festival season. However, we are not cutting down on the manufacturing part,” said Mr Ravinder Zutshi, Deputy Managing Director, Samsung India.
According to Mr Francis Xavier, Managing Director, Francis Kanoi Marketing Planning Services, “The consumer durables industry has been growing over 40 per cent in the last two years. All conditions were ideal for the sector's growth. However, going forward, it is difficult to sustain this growth momentum. In fact, the Delhi market will be a key indicator of the forthcoming trend and we do see some inventory pile-up.”
Colour TVs
Industry watchers note that if there is a slowdown in durables as a category, colour television will be the last to get affected.
“The consumer buying pattern shows that the first choice is a television (total family entertainer), then refrigerator (family requirement). Air-conditioners, washing machines and microwave ovens in that order of preference, will get affected more.”
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