The festive season to leverage higher growth for home appliance market in India

MUMBAI: With the festival season having been kicked off, home appliances companies are looking forward to a hectic quarter ahead. According to the Home Appliances Division of Confederation of Indian Industry (CII) high end models of televisions i.e. the LCD and flat panel monitors and DVD players will top the chart this season followed by refrigerators.

Home Appliances companies are expecting sales to grow by 20-25 per cent for these products. "This year, very clearly the focus will be on two key products, Flat Panel Displays, specially the Plasma and the LCD Monitors and the DVD Players," says LG Electronics India Ltd assistant general manager Sandeep Tiwari.

Godrej has launched its new range of refrigerators called EON to capture the demand in the festival season says Godrej vice president G Sundaraman.

The companies are increasing their ad spend and launching new promotional campaigns. Godrej for example has already launched a series of promotional campaigns and dealer meets. According to Sundaraman, the company has plans for a number of festival schemes to maximize sales during the forthcoming months. Tiwari adds that LG plans to spend something in the range of Rs 100 crores on promotional and advertising activities.

According to the CII Home Appliances Division the market for various Home Appliances will continue to grow right through to 2015, and not just this festival season. "Based on feedback from various CII members, we believe that that outlook for the Home Appliances markets is looking good for the next 10 years" says CII head manufacturing services Dr. Sarita Nagpal.

" The air conditioners market for example is set to grow at a steady 10 per cent upto 2015, while refrigerators market is expected to slow down from 7 per cent to 6 per cent after 2009-10", adds Dr. Nagpal.

Washing machines are also expected to log in a steady 9 per cent growth upto 2015, while microwaves are expected to grow the fastest at 15.30 per cent upto 2009-2010 and then slow down to 12.5 per cent upto 2015. Vacuum cleaners have not been a hot favourite amongst the Indian buyer and is expected to grow at 7.6 per cent.

The white goods market in India is pegged at around Rs 80 billion (inclusive of the unorganized segment). The refrigerator market has the maximum share being valued at over Rs 37 billon, close on the heels is the air conditioners market at Rs 35 billion. Washing machines have a comparatively smaller share at Rs 7-8 billion. In volume terms the refrigerator market is estimated at 3.0 million, washing machines at 1.4 million and air conditioners at 0.96 million.

According to the CII Home Appliances Division, the consumer durable industry registered a buoyant trend during the financial year, 2005-06. The division has identified air conditioners (15.2 per cent) and microwave ovens (26.7 per cent) as the sectors that recorded double-digit growth among white goods in terms of quantities produced. Some sectors that recorded single-digit growth were refrigerators (5.7 per cent) and washing machines (7.7 per cent). The rate of growth in production has been more in terms of quantity or in volume growth rather than the growth in value terms for a number of products because of a change in prices.

According to Dr. Nagpal, "The home appliances consumer is spoilt for choice in every category of the home appliances products. With companies such as Godrej planning to launch at least one new innovation every quarter and the housewife stretching her budget to buy the best possible product, there is ample room for new models to enter the market."

The CII Home Appliances division has been tracking the geographical trends of the home appliances market. According to them a closer look at the geographical trends reveal that North India accounts for 36 to 46 per cent of the home appliances market depending on which product we are talking about. For example North India controls 36 per cent of the refrigerator market and 46 per cent of washing machines market. The North Indian consumer is the biggest buyer in every category followed by the West.

With the consumer mindset changing towards the life of "consumer durables" and towards taking loans to buy these, the market for home appliances is expected to show an upward trend.

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