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Consumer durable prices jump by 10%
MUMBAI, JAN 5 (AGENCIES):
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Published on 6 Jan. 2011 1:00 AM IST
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If the shooting prices of onions, eggs and garlic were not enough, the latest round of price increase in consumer durables would certainly burn a hole in your pocket. Consumer durables comprising washing machines, refrigerators and air-conditioners have just got costlier by 5-10%.
Companies like Godrej Appliances and Samsung India have already raised prices across segments and are, in fact, contemplating another round of price hikes. Rising metal prices, especially steel, have prompted durable makers to take prices northward.
“Metal prices have been on the rise. There’s no way we can absorb the hike in input costs. We have thus passed on input cost hike to consumers,” said George Menezes, chief operating officer, Godrej Appliances, a division of Godrej & Boyce Manufacturing Co. Godrej has raised product prices in the range of 3-5%. A 230-litre Godrej frostfree refrigerator, which was earlier priced at Rs.14,610, will now cost consumers Rs.15,210, while a 300-litre one would cost Rs.25,100, which is higher by Rs.800 compared to the earlier price of Rs.24,300, states Times news.
Indian steel-makers have raised prices in the range of 4-5% across grades. Besides, even copper and polymer prices have been on the upswing.
Korean consumer durable-maker Samsung, too, has raised prices of its products across the board. While Samsung refrigerators and washing machines would now cost 2-3% more, its air-conditioners will see a 10% mark-up immediately, said the company. “This is an immediate hike but one cannot rule out another round of increases taking considering the rising input costs,” said Ravinder Zutshi, deputy MD Samsung India.
LG Electronics, on the other hand, is still in the process of deciding its course of action on the price front. LG had increased prices of its products during Diwali and once again in December. “We are currently evaluating if there can be a possibility to increase prices further as we have taken two rounds of hikes in the last quarter, “said YV Verma, COO, LG India.
Samsung, too, had hiked prices for its refrigerators by about 3% in the October-November period. However, in September last year, when steel prices went up by 4-5%, some consumer durable-makers like Godrej had restrained from passing on the cost increase to consumers so as not to disturb the festive fervour. For durable-makers, which operate on wafer-thin margins, absorbing any rise in input costs is a difficult proposition.
Steel panels account for around 20% of the material used in a product like refrigerator. Polymers, on the other hand, are used in packaging material. Any rise in the cost of these commodities can put pressure on the margins of durable companies.
On the other hand, price hikes can force consumers to defer their purchases. A severe winter and a couple of instances of rainfall in some parts of the country have already dampened spirits, said industry officials. But these are lean months for the industry. Demand is expected to pick up between February and June. The durable industry is optimistic about a quick turnaround during the peak season. “We believe Godrej Appliances will continue to grow at a CAGR of 29%,” said Menezes. The Rs.35,000-crore consumer durable industry clocked a growth of 13% in 2010.

 
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