To beat the impact of rising commodity prices, white good makers have hiked prices for the third time this year. According to industry experts, manufacturers may hike prices once again in the new year, Business Standard reported.
White goods are major household appliances such as air conditioners, washing machines, televisions and refrigerators.
Most companies are likely to raise prices in the range of 5-8 percent, Eric Braganza, president of the Consumer Electronics and Appliances Manufacturers Association and Haier Appliances India, told Business Standard, adding that some manufacturers have already passed on the burden to the consumers through price hikes.
Despite hiking prices by about 12-13 percent earlier this year, consumer durable companies were unable to fully cover the increase in costs.
Commodity costs have gone up by about 20 percent in 2021, while the price increase in products was limited to 12-13 percent only so far, the report quoted Kamal Nandi, business head and executive vice-president at Godrej Appliances, as saying.
“There is still a gap of about 6-8 percent between commodity prices and the price increases that we have taken as an industry,” Nandi said.
Godrej Appliances, which has already increased prices by 3-4 percent in December, is planning another round of hike next month on refrigerators, washing machines, and air conditioners.
Nandi said the company avoided increasing prices during the festive season as it would dampen demand.
Television maker Super Plastronics, which manufactures the Thompson brand of televisions, will raise prices by 5-7 percent in January if component shortage continues.
Although prices of raw materials such as steel, aluminium, copper and crude oil have come down by up to 15 percent since October, they still are at higher levels. Between January and October, prices of these commodities had risen sharply between 25 and 140 percent.
Meanwhile, consumer durable manufacturers fear the spread of the Omicron variant of Coronavirus could disrupt the supply chain and impact component supply.
“We are not faced with any issue so far. We were stocking up on 15 days of components but now we have increased it to 45 days,” Nandi told Business Standard.
Till now, consumers have absorbed the price increases, but consumer durable companies will have to adopt a cautious approach while planning further price increases, said experts.
“Moderation of competitive intensity in coming months is key as it is critical for potential price hikes, and thus better profitability for the entire industry,” Moneycontrol quoted brokerage firm Emkay as saying.
The price hikes in the last nine months of this financial year and the improvement in demand will likely contribute to an 8-10 percent revenue growth in the December quarter, Moneycontrol reported.
Meanwhile, a Crisil report earlier this month said manufacturers of consumer durables are likely to see a 20 percent growth in revenue this fiscal, Mint reported. Last fiscal, the sector, which includes consumer electricals (excluding mobile phones) and white goods, clocked a revenue of Rs 2 trillion.
Positive consumer sentiment and higher realisations will boost growth momentum this fiscal and lead to 14-15 percent revenue growth for white goods, the report said.
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(Edited by : Thomas Abraham)
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