Some of the oldest specialised consumer electronics and appliances makers in India, like Godrej Appliances, Mirc Electronics, Whirlpool and Philips, have begun addressing growth concerns.
While Godrej, traditionally an appliances maker, has now started making colour televisions and DVDs, Mirc has moved into the appliances segment with its Onida brand of washing machines and ACs. Philips and Whirlpool, too, have begun mulling similar strategies, industry sources said.
“In the field of technology, companies will have to continuously think what the next wave will be and how one can ride on that. It's also equally important to work on a strong bargaining power with the trade,” said D Shivakumar, executive director and vice-president of Philips India.
The growing importance of modern retail formats has also necessitated the need to have a wider product portfolio to ensure higher bargaining and shelf power.
Industry officials said a larger product basket also helps strengthen the brand image in the eyes of the consumer. Globally, Chinese and Korean brands have been fairly successful owing to their wide bouquet of brands.
“It is essential to have a wider bouquet for both CE and appliances to get a better trade deal. Also, since the sales of these products are seasonal, one can push the alternate category, put resources to use, ensure cash flows and also keep employees motivated,” said Gulu Mirchandani, CMD of Mirc Electronics.
Trade sources said it was easier for consumer electronics makers to diversify into appliances since they have a better distribution reach with CTVs being the largest contributor to industry sales. “Branding, advertising, servicing and distribution are key areas where appliances makers will have to invest a lot of money into,” said a leading retailer.
Bharat Gothoskar, senior marketing manager of Godrej Appliances, said it was more relevant today to be present in all product categories. “We are testing the waters with DVDs at the moment, with CTVs as a natural extension. Companies cannot afford to be dependent on a single category to ensure future growth and to take on growing competition,” he said.
The last Budget has imposed an additional 4% CVD on completely imported products, which makes imports far more costlier. Companies like LG, Samsung, Philips, Videocon and others are planning to get back to manufacturing high-end products and eventually become the sourcing hub for their global requirements.
“Continuous investments in technology and future growth opportunities are issues that consumer durables companies, even globally, have to address. A wider product portfolio is imperative to keep both sales and profit growth rates moving upwards,” said KS Raman, senior industry consultant.
Business volumes are down more than 40%, especially in the colour television segment, since the last quarter of '05. Leading durables majors have pruned production and imports by 22-25% since the December quarter.