Mumbai: Godrej Appliances, the consumer durables division of the Godrej Group, is likely to hike prices of its refrigerators and washing machines by 2-3 per cent starting June, due to the rising input costs on weakening rupee and increasing oil prices, top company official said.
"One can expect a price hike starting from June. Refrigerators and washing machine, which are largely plastic and steel led, will see a price increase. The quantum should be 2-3 per cent," its business head and executive vice president Kamal Nandi told PTI.
He said that the industry is also likely to increase prices in similar amounts going forward. While the rupee is hovering around Rs 67 mark against the US dollar at present, the crude oil breached the USD 80 a barrel mark recently, thereby increasing the input cost for consumer durable companies.
Asked if the price hike would impact the demand, Nandi said, "Given that there is good monsoon expected this year and the summer has been subdued in terms of demand, we expect the demand to go up."
Hoping that the government might bring down the goods and services tax (GST) to 18 per cent, from 28 per cent at present on ACE (appliances and consumer electronics) goods, before the festive season, he said, "This, coupled with a good monsoon, should propel growth for the industry."
Refrigerators account for 55 per cent of the revenue for the Rs 3,900-crore company, while air conditioners and washing machines contribute 18 per cent and 17 per cent, respectively.
The company expects a 20 per cent growth in refrigerators, led by new launches, and over 25 per cent growth in washing machines, according to Nandi.
"In refrigerators, we have about 15 per cent market share, while in washing machines, its 9-10 per cent. We want to increase our share in both at least by 2 percentage points this year," he said.
Nandi estimated the total refrigerator industry to be around Rs 18,000 crore, and the washing machine industry to stand around Rs 9,800 crore at present. The company plans to launch IoT (Internet of things)-enabled refrigerators this year, Nandi said, adding, "We are testing those products at present."
The consumer durables unit of the Godrej Group said it has seen a de-growth in sales of air conditioners (ACs) due to a subdued summer towards the later part of the season.
"At the industry level, the demand is not very good, but ACs have seen a de-growth. This is largely because the intermittent rains from March in the south, west, east and even in the north is bringing down the temperature, impacting the consumption of categories like AC adversely," he said.
Nandi said there was a de-growth of 20 per cent in April, and May also see a similar de-growth. Meanwhile, the company is betting big on the premium segment and expects its share to increase to 30-35 per cent in the next three years.
"Premiumisation is a trend that will continue. Demand for premium products are going up in the rural market and our focus, therefore, is to expand our exclusive outlets in the tier II, III and IV markets," he said, adding, "We have over 80 stores at present, and we want to open 20 more this year."
The premium segment contributes around 20 per cent to the company's revenue at present, and, "we expect to take it to 30-35 per cent in three years," he said. The company is targeting a 25 per cent revenue growth to nearly Rs 5,000 crore in financial year 2018-19.