Consumer durables, FMCG companies on recovery path

Nandana James Mumbai | Updated on September 27, 2020 Published on September 27, 2020

Back in business   -  BUSINESS LINE

Most of the firms are now operating at 100% production capacity

Companies in the consumer durables and fast-moving consumer goods (FMCG) sectors are seeing a revival in demand on the back of factors such as the gradual opening up of markets, favourable monsoon, the rise in first-time buyers from rural markets and the onset of the festival season. Most companies said they are operating at 100 per cent production capacity, with a few also reporting year-on-year sales growth over last year.

“We were impacted by a significant loss in sales in the first quarter...The loss in April was 100 per cent, while we experienced about 60-70 per cent drop in sales in May. However, June and July showed an upswing...In August, we achieved a positive growth rate of 10 per cent over last year. Even for September, we are expecting a 10 per cent growth over last year. We are seeing encouraging signs of demand revival and we are hopeful that it will sustain for the months to come,” Kamal Nandi, Business Head and Executive Vice-President – Godrej Appliances, told BusinessLine.

Rise in demand

There has been a month-on-month increase in demand, affirmed all the companies in these sectors that BusinessLine spoke with.

At Panasonic India, August marked an 18 per cent y-o-y growth, as well as a 17 per cent growth over the previous month with the onset of the festival season, said Manish Sharma, President & CEO, Panasonic India. “I had thought that the market would be completely down and it will take a long time to recover — which is not the case. I am also finding that large electromechanical projects are continuing; it is not that it has collapsed,” said B Thiagarajan, Managing Director, Blue Star Ltd.

Since people continue to work from home, there is an increased need for appliances such as refrigerators and air-conditioners, while there are also people who are reluctant to hire domestic help due to the fear factor of the pandemic, Nandi explained.

Rural drive

Talking about how the rise in first time buyers from rural markets is further propelling demand, Sharma said that consumers across markets are preferring large screen LEDs over smartphones to view rich over-the-top (OTT) content. Similarly, microwave ovens and refrigerators continue to grow, with the grooming range (especially trimmers) also growing by 4-5 times as consumers are avoiding salons, he added.

With the gradual unlocking of the economy from June onwards, recovery is definitely on track which is visible through the high growth in sales numbers, said a spokesperson for Voltas.

Anuj Poddar, Executive Director, Bajaj Electricals, said the demand is back to pre-Covid levels, with the demand for kitchen appliances being better than pre-Covid times. “I don’t think there is pent-up demand, it’s genuine demand...We will see a growth in the total revenues over the next 3-4 months over last year, but had the supplies been better, we would have had even better growth,” he said.

As for the FMCG sector, Ullas Kamath, Joint Managing Director, Jyothy Labs, said, “Demand for FMCG is back. For us, we are doing better than pre-Covid levels.”

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Published on September 27, 2020
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