Economy

Covid-19 impact: Consumer durables sector must drive digital transitions, says CEAMA chief

Nandana James Mumbai | Updated on April 08, 2020 Published on April 08, 2020

Industry association has recommended measures to alleviate the stress on the sector

March and April generally contribute over 12 per cent each in sales turnover to the consumer durables industry. But with sales in March down by 55 per cent year-on-year amid the coronavirus-induced lockdown, the sector is staring at uncertain times.

Kamal Nandi, Business Head and Executive Vice-President, Godrej Appliances, who is also the president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA), in an interview to BusinessLine, said that while the impact is inevitable, companies should focus on using the current situation to make some key transitions like driving digital transitions as well as think of changing their approach to sales, logistics, marketing, people development and customer service, to be better prepared for the coming times.

Excerpts:

How grave will be the impact of the coronavirus outbreak and the resultant lockdown on the consumer durables industry? How will revenue and demand be affected?

The ongoing summer season is a crucial period for the appliances industry. February to June period contributes to around 60 per cent of the total turnover of the industry. In fact, March and April contribute to 12 per cent each in sales turnover to the industry. Due to the current lockdown and dampened consumer sentiments, the industry has seen a drop of up to 55 per cent in sales in March 2020. As the lockdown has been extended to mid-April, we are expecting similar impact on sales in April as well.

The only silver lining is that summer is delayed this year. Temperatures are expected to increase in the coming days. However, due to the adverse impact of Covid-19 and uncertainty about the lockdown, as well as the lingering impact with consumers not stepping out unless it is critical, and the overall economic impact, we are not sure when situations will return to normalcy and hence one can’t really estimate the impact on revenue.

We are studying the impact seen in other countries like China too, but India may behave very differently and hence it is difficult to predict.

What are some of the strategies companies can put in place to tide over the situation? How will this help?

While the impact is inevitable, companies should focus on using the current situation to make some key transitions. This is a unique situation and can drive digital transitions like nothing else can. Efficiency-building and productivity-focused exercises should be thrust areas for everyone. Capability building across the hierarchy should happen and employees must look at ways to multi-skill themselves. Scenario planning is being done across the board and that will help companies respond with greater agility. Communication with stakeholders — internal and external — must happen on a frequent scale.

Enabling the ecosystem to move towards digital will give returns to the industry as a whole. Long-term developments may need to be fast-tracked. Companies should think of how to change their approach to sales, logistics, marketing, people development and customer service to be better prepared for the coming times. And, perhaps most important, this is a time for greater collaboration across all stakeholders.

What can the government do to alleviate the stress on the consumer durables industry?

The government could definitely look at tax reduction in times to come. As financial support to the industry, through various independent bodies, the industry has appealed to the government for the postponement of loan repayments at least up to June, 50 per cent reduction of interest rate on active and new loans, easy credit, especially for SMEs, putting EMIs on hold for the next three months, one year of no levy of local taxes, faster GST settlement/refunds and deferment of GST payment by 90 days for the next six months and pegging GST at 50 per cent for the rest of the year.

To increase disposable income, for the time being, we have also recommended to temporarily stop the employee contribution to PF, a higher exemption limit on medical expenses and lower income tax for this financial year which, in turn, will result in greater consumer expenditure.

Allowance of extra overtime to catch up with the time lost and support to industry in the form of wage payment to contract labour, from the government, will help stabilise the situation faster in the post lockdown period. Delaying the reinstatement of customs duty on open cells to 5 per cent, waiving various custom charges on select cases and easy processes to clear consignment at ports are recommended as well.

As various types of compliance entail capital expenditure, holding off the proposed harmonisation of select models (single-door and double-door refrigerators) with IEC standard, the regulation of membrane-based water purification systems, suspension and revision of time lines for various standard implementations under quality control orders have been suggested.

With the disruption of the supply chain, as a relief measure to manufacturers, BEE may also reconsider the deferment of new energy table for air-conditioners and washing machine table (star rating plan for front load, top-load automatic and semi-automatic models), along with waiving the electricity duty.

The reduction of collection target for e-waste and plastic waste for the financial year by 50 per cent will also help the industry to a great extent.

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Published on April 08, 2020
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