Companies

Recovery in sales likely to begin by July-Sept, says Godrej Appliances’ Kamal Nandi

Abhishek Law Kolkata | Updated on June 15, 2021

Kamal Nandi, Business Head and Executive V-P at Godrej Appliances

With new launches, the company is hopeful of faster recoveries

Even as 60-70 per cent of sales in Q1 (April to June) FY22 witnessed a washout due to pandemic-induced regional lockdowns and restrictions, recoveries seem to be happening in markets — specific pockets — that have re-opened. Consumer durables like refrigerators and washing machines are driving demand, while summer items like air coolers and air conditioners witness slow off-take, says Kamal Nandi, Business Head and Executive V-P at Godrej Appliances.

Godrej Appliances is a part of the Godrej & Boyce Manf Co Ltd.

According to Nandi, who is also the President of CEAMA (the apex body of consumer electronics and appliance manufacturers), nearly 40 per cent of the markets pan-India are opening up now — either fully or with some restrictions — with better footfalls and higher conversion rates. A June 2020 versus June 2021 comparison across markets which have opened up indicates better recoveries, mostly for large appliances.

Peak demand

By the second half of June, most markets are expected to open up fully, with recovery in sales likely to kick in by Q2 (July – September) onwards. However, peak demand is expected to play out in Q3 (October-December) and Q4 (January – March) of the fiscal.

In FY21, recoveries happened primarily in the festival season of October to December, with January-March sales being hit by a price rise of 12-13 per cent, across the board, due to a rise in commodity costs such as copper, aluminium, steel and so on. (Commodity price rise, of 20-odd per cent, witnessed during the second half of the last fiscal that was factored in Q4 prices.)

“Initially it was a lockdown in Maharashtra that accounts for 10 per cent of the market. The industry and us at Godrej were able to sell through the first half of April, with only Maharashtra being impacted. However, by the second half of the month, almost all States went for lockdowns and sales were hit. In May, almost all markets remained closed. By June 1, some opening up was happening and we saw sharp recoveries in pockets, especially for large items like fridge and washing machines. New launches, including premium ones, announced by us in the beginning of fiscal, are pulling up sales,” he told BusinessLine.

Summer sales hit

The April-June months of a fiscal year, account for 36 per cent of sales, and nearly 60-70 per cent (20-25 percentage points) of that has been hit already. Summer product sales are already low as the advent of monsoons has either been on time or “in-advance” across major markets of North, South and West India. Factors like increase in MSP and a good crop will play out on the demand in the second half of the fiscal.

“Recoveries are expected from Q2 onwards as stability comes in. Apart from festival season sales, recoveries will also play out over Q4, as pricing pressure is not expected to play out like last fiscal. Commodity prices have consolidated and we expect a downward movement around December,”Nandi explained.

Production across manufacturing facilities has resumed and is up at 40 per cent capacities. By, H2 (post September), capacity utilisation is expected to be back at 70-100 per cent depending on demand.

“Godrej Appliances carried out maintenance work at its units, while the production of vaccine refrigerators at Shirwal unit and deep-freezers at Mohali unit, which caters to the medical segment was on,” he said.

Outlook FY22

According to Nandi, an immediate outlook on turnover is “difficult” considering the “changing scenario”. However, with new launches being planned, the company is hopeful of faster recoveries.

Godrej Appliances reported a turnover of ₹4,000 crore in FY21; and is expecting a 25 per cent growth in FY22. “However, Q1 sales have been hit. But, we are hopeful of substantial recoveries in Q3 and Q4 driven by new launches,” he added.

E-commerce sales account for 5-6 per cent of the total turnover, while it is working on plans to get into the small appliances segment, apart from microwaves and Viroshield (a UV-C technology-based disinfecting device).

Published on June 15, 2021

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