For India’s appliances industry, recent windfall gains from lower producer levies may well be offset by losses from the sliding rupee.
About a month after policymakers lowered the GST on refrigerators, washing machines, toasters, and some other products to further encourage purchases in an otherwise urban-centric consumer market, companies are being forced to raise prices by 3-6% to cushion the impact of a falling local monetary unit. Some price increases take effect as early as this weekend, with both Samsung and LG informing its sales channels about the raises.
LG and Samsung, which together control more than 55% of the Indian market, have already decided to increase prices of appliances from this weekend by 3-5.5%. Other brands are also giving finishing touches to new pricing lists, two senior industry executives told ET. Computer makers such as Lenovo have decided to enhance prices by 3-4%.
The increases in these categories will range from Rs 700 at the entry level to up to Rs 3,000 for premium models. LG India’s business head (refrigerators) Vijay Babu said while depreciating rupee is a concern, the company is closely monitoring the situation and as of now there is no price hike. Samsung India did not respond to an email.
Several online-focused television brands, such as Kodak, Thomson and BPL, have decided to up prices of 32-inches and above screen sizes by around Rs 1,0 ..
For white goods, the price increases will take away about half of last month’s 8% decline after the government decided to reduce GST from 28% to 18% on refrigerators, washing machines, vacuum cleaners and a few other consumer products. Pulkit Baid, director at top electronics retailer Great Eastern Retail, said that demand was gradually increasing after the post-GST price reset, but the latest round of increases could nullify the positive impact of levy reductions and affect purchases.
Panasonic India CEO Manish Sharma said the company is trying to keep the increases as low as possible as the festive season is round the corner. “We intend to keep consumer sentiment positive,” he said. The industry has also had to contend with tepid sales during Onam, the biggest festival in Kerala that is ravaged by the worst flooding in more than a century.
Panasonic is looking at a 2-3% price increase, while Godrej Appliances will decide on the quantum by month-end. LG India has decided to raise prices from Saturday. Lenovo India CEO Rahul Agarwal said personal computer prices are bound to go up since the industry cannot absorb the devaluation. “We are working on the exact price hike which will cover the cost. We don’t expect this will have any significant impact on PC demand since it is stable right now,” he said. To be sure, makers of premium clothing brands, top retailers dealing with imported products or raw materials in categories such as personal care and cosmetics, and fine dining restaurant chains have decided to temporarily absorb the impact of the rupee depreciation.
Mars Wrigley Confectionery India, is keeping a close watch on rupee devaluation while working out potential mitigating actions, said director (finance) Chirag Shah. Fine dining chains that import ingredients, like Kylin Restaurant and Speciality Restaurant (it runs Mainland China) said they are absorbing the impact as of now. Arvind Brands & Lifestyle CEO J Suresh said the situation is not yet alarming and a three-percentage point increase will not impact prices. The company runs stores of about two dozen brands, including Gap, US Polo, Sephora and Children’s Place, as a licensee or part of joint ventures.
“Also, these products are not very price sensitive from a consumer point of view. If the rupee touches 75, then there could be price hikes in a few categories,” Suresh said. – Economic Times