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Panasonic Looks Beyond Electronics To Expand Business In India

The Indian arm of Japanese consumer durables maker Panasonic is looking at increasing the share of its consumer appliances business, as well as its business-to-business products in India as it hopes to sell more washing machines, air conditioners, refrigerators, and industrial solutions in the country.

Currently, the company fetches 50% of its consumer durables revenue from its electronics business that comprises TV sets, music systems, accessories, while the remaining comes from the sale of other products like air conditioners, fridge and washing machines. Over the next three years revenue from the latter could go up to 65% of the overall durables business, said Manish Sharma, president and CEO, Panasonic India and South Asia.

Sharma said a lower penetration of appliances in India is pushing the company to expand its share in these categories as it seeks to benefit from increased consumption of white goods over the next few years. “In the next three years, 65% of revenue will come from appliances which means growth of appliances will be faster than electronics,” he said, adding that going forward it plans to expand business beyond electronics to sell more business-to-business solutions, as well as large appliances.

The move also comes as the company plans to expand its business to Rs. 12,000 crore by 2020, up from the Rs. 10,300 crore it reported for the year ended 31 March.

Of this, close to 76% came from its consumer durables business while the rest came from its business-to-business segment that comprises industrial and automotive products, and security systems.

Over the next five years, 25% of its revenue could come from the solutions business in B2B offerings, Sharma added.

Panasonic is also backing its plans with increased local production.

Over the last one year the company has ramped up local production of refrigerators with a plant at Panasonic Technopark in Jhajjar, Haryana.

“We started an air conditioner factory in 2013 and a plant for refrigerators in 2018, in some sense we are slightly late in entering the manufacturing of these products in the country so if you look at our revenue, the contribution is skewed more towards electronics than the rest of the industry,” Sharma said.

In 2017, it also set up an innovation centre in Bengaluru that Sharma said will help it launch more localized products, especially in tier 2 and 3 markets in categories such as washing machines and refrigerators.

“Our plan is to develop products more suited for Indian consumers. Currently, we offer our global portfolio here that is more favorable and suitable for consumers in urban markets,” he said.

Panasonic’s move to expand the scope of its business comes amid increased competition from home-grown as well as competing Chinese brands such as Xiaomi.

In an earlier interview with Mint, Xiaomi’s India chief Manu Jain had said the company will start selling washing machines, refrigerators, and water purifiers in India soon.

It helps that fewer number of households in India own consumer appliances such as air conditioners, refrigerators and washing machines, while the penetration levels of TV sets in India continues to remain high. Only 28% of Indian households own a refrigerator, while a modest 5% own air conditioners, the penetration number for washing machines stands at 11%. In contrast, penetration of TV sets has reached 66%.―Livemint

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