With power cuts ranging up to 16 hours in several parts of Tamil Nadu, the ripple effect of this is seen in sales of consumer electronics and durables, including kitchen appliances.
For a majority of brands, Tamil Nadu is a major contributor. On an average, 10-12 per cent of sales for major players such as LG, Samsung, Onida and Godrej come from the Tamil Nadu market. But, in the last six to seven months, sales figures have moved southwards for most of them.
Consumer sentiment hit
L.K. Gupta, Vice-President (Marketing), LG India, says though the company has registered 15 per cent growth in sales in Tamil Nadu during the January-November period, the power situation in the State has certainly affected the consumer sentiment in the southern regions of the State.
“We have lost around 10 per cent sales in the last six months. It seems to be more persistent in upcountry markets,” he said.
Onida too has the same story to share. However, since Onida does not have a presence in the refrigerator and electrical appliances segments, “the impact is not that bad for us”, said Sanjeev K. Jain, Vice-President, Mirc Electronics. He said, there was a considerable drop in sales of TVs in those markets.
Durables retailers in markets such as Tiruchi, Madurai, Tirunelveli, Sivakasi and Virudhunagar say the drop in sales range up to 30 per cent in value terms. The Managing Director of Meenakshi Fan House Pvt Ltd, a leading durables retailer in the Madurai-Tirunelveli belt, C.N. Saravanan, says despite price increases in the last one year, the 9-outlet retail chain has posted 25 per cent drop in sales (in value terms) so far this year compared with last year. “In terms of volume, it would be more,” he pointed out.
Kothandarama Setty, Chairman, Viveks, said power cut is not the only reason for the drop. “The Tamil Nadu Government’s free mixer grinder, wet grinder and fan scheme too added to it,” he said.
In some categories, the drop is even worse. M. Thangadurai, Manager of Rathna Stores in Tiruchi, a major multi-brand retailer in the district, says categories such as induction stoves and air-conditioners are the most affected. According to him, these products have suffered 70 per cent drop in sales.
Recently, announcing his company’s capacity expansion plans, Tamal Chaudhuri, Managing Director of A.O.Smith India Water Heating Pvt Ltd, said sustained power cuts this year in the State has led to a 15 per cent drop in sales for the industry. According to him, TN is among the largest markets for water heaters, selling around 1.5 lakh a year.
Latent demand
However, the latent demand is building up. “We all know that it’s only a temporary phenomenon, and once the situation improves, sales will resume,” says Meenakshi Fan’s Saravanan.
He says, the recent announcement of sops by the Chief Minister for small and medium industries in the State, would offer a breather.
By and large, the durables industry is keeping its fingers crossed whether the forthcoming New Year sales would buck the current trend.