IFB Industries Stares Localization For Some Of The High Cost Import

Home grown appliance maker IFB Industries has stared localization for some of the high cost import as a de-risking mechanism against future currency depreciation impact on the business.

The company’s localization initiative has resulted in a new generation of electronic components for models being manufactured in India, IFB said in its annual report.

“The work will result in a significant portion of electronic controller imports being substituted by localized production. The expected customer demand, combined with the launch of new models and plans to reduce material costs, provide a robust outlook for the (appliance) division,” IFB said.

Incidentally, IFB’s profit last fiscal took a beating which the company attributed to depreciation of rupee, higher material cost, increase in custom duty on AC and microwave oven, and higher operating expenses. The company’s net profit for FY19 was Rs 73.95 crore as compared to Rs 83.25 crore in the fiscal earlier. This is despite the appliance business revenue growing by 17%.

IFB said the company will localize the manufacturing of fixed speed and inverter range of air conditioners with the project planned to deliver commercial production by end-January 2020. The project is located at Goa.

“The impact of the increased forex levels and additional customs duties is also being addressed through price increases, which has already been rolled out,” the company said.

The company will also roll out a new range of front load and top load washing machines and microwave oven. IFB is also working on to reduce material cost in manufacturing through multiple projects.

“The price increases and material cost reductions under implementation will also help to improve the bottom line margin in order to negate impact of the current forex levels and customs duties,” it said.―Newsfeed

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