Kolkata-based consumer durables-maker, IFB Industries, eyes increased localisation of high cost imports as a de-risking mechanism. Import substitution is being considered in washing machines and air conditioners.

According to the company’s annual report 2020-21, electric controller imports were substituted in the washing machine vertical and the current focus is on the AC segment. The company also localised manufacturing of the now in-demand inverter AC range in FY20.

IFB’s appliance division saw over 6 per cent growth in turnover, YoY, to approximately ₹2250 crore while EBITDA margins stood at ₹193 crore, registering a growth of over 90 per cent.

Also see: Kutchina hopes for greater presence in markets

“Performance improved due to favorable product mix, price hike, material cost control, reduction in operating and administrative costs,” the annual report said.

There is healthy customer demand despite the pandemic impacting sentiments; tier 2 and tier 3 towns are seeing a significant rise in demand towards high capacity washers (washing machines), dishwashers and so on, it added.

Combined with the launches in front load and top load washing machines and microwaves, and a reduction in material costs, the outlook remains “positive”. Localisation helps de-risk its operations “against future currency fluctuations”. Price hikes been initiated in washers and air conditioners post northward movement in commodity costs since November last year.

Business trends

IFB, in its business outlook, said, “demand has been high” in top-load washing machines in the 6.5 kg category, ones with higher capacities, and across those with in-built heaters.

In ACs, sales volume dipped by 10 per cent in FY21 (to 81000 from 90000). A recovery till Q4FY21 notwithstanding, there were further disruptions in the June-quarter. However, pent-up demand and new customer acquisitions are expected from July onwards.

Cloth dryers and domestic dishwashers witnessed traction and became “strong growth” categories. Clothes dryers are no longer seasonal in demand while dishwashers – which witnessed high demand post the pandemic – have seen an increase in distribution. “The company intends to sell over 100,000 dishwashers per annum,” the report said.

Kitchen appliances, including built-in ovens, hobs, and chimneys are seen as aspiration offerings which will pick-up as a “modernisation of kitchens happen”.

Expansion plans are afoot in the modular kitchen vertical, where results are not as desired. Post expansion in Goa and Bengaluru, the company plans to “reformat” its own stores too.

Related Topics
comment COMMENT NOW