"We expect a10-15% growth this festive season"
Godrej Appliances optimistic about achieving its revenue target of Rs 4,000 crore
The government's plan to ban import of air conditioners is likely to rather increase the business of home appliances in the country. The reason is that it will not only encourage domestic manufacturing, but also help create jobs. Keeping in view that more and more people in the country are opting to work from home, Godrej Appliances has plans to launch a host of products towards that direction and in an exclusive interview to Bizz Buzz,
Kamal Nandi, Business Head and Executive Vice President,
Godrej Appliances shares further details. Excerpts:
The government is planning to ban the import of air conditioners with refrigerants. What will be its impact?
India has one of the lowest penetrations of ACs and has tremendous opportunity for long and sustainable growth with the Report estimating domestic demand to grow to 16 M units by FY 25.
The notification to prohibit the import of Air Conditioners with refrigerants will boost AC manufacturing in India and create more jobs. This move is consistent with the government's twin objective of making India fully self-reliant in manufacturing air conditioners and capturing a greater share of the global AC market through export.
Do you think that the government's step will diminish jobs? How far will it help achieve our goal of Atmanirbhar Bharat?
On the contrary, we believe this will encourage domestic manufacturing which in turn is bound to create jobs. The demand for air conditioners is soaring high because of rising global temperature, rising middle-class population, growing number of houses and other structures and increasing affordability and disposable income. Moreover, in the new normal, many will be opting for permanent 'work from home' set up – be it individuals or firms employing them. With restrictions in AC imports, the local manufacturers will be rolling up their sleeves to leverage this growing demand by either setting up operations in-house or by sourcing finished goods and components from other local manufacturers. Either way, this will lead to job creation.
How can we say that it (ban on import of ACs with refrigerants) will help increase exports? How far will it help achieve our goal of Atmanirbhar Bharat?
Currently, India's AC imports in Completely Built-Up (CBU) form is approximately 2 ~ 2.5 Million units per annum while the total market size is 7 Million units.
The ban on the import of ACs with refrigerant will definitely trigger higher investments in setting up manufacturing capability to offset these imports and will also cater to the growth in demand for ACs. But these capabilities cannot be built overnight hence we foresee an acute shortage of Air Conditioners in the coming season. Prices will also go up in the coming season, to the tune of almost 10 ~ 15 per cent, since economic import alternatives are no longer available. This correction in prices, in the interim period, is required, as the AC industry is reeling under huge pressure.
In the long run, this will also attract investments in the manufacturing of components used in ACs, e.g. Compressors, Inverter Controller Drives, etc. This will also entail higher investments in R&D and in building design capabilities to cater to the regulatory norms of BEE & QCO applicable.
The government is gearing up for facilitating & attracting smooth investments for indigenous AC Manufacturing. Also, as & when there is excess manufacturing set up in place, India can look at the opportunity in the export market for ACs.
People have been working from home these days due to Covid-19. So, how are the home appliances manufacturers trying to cope up with the issue to increase their business?
Due to the current pandemic and subsequent lockdown, many have resorted to 'working from home', which comes with its own set of challenges. Consumers have come to appreciate appliances and the value that they add to their lives – they are seeking a substitute to domestic help for cooking and cleaning, looking for comfort and convenience at home, better storage solutions for groceries and fresh produce with limited visits to the local market, overall health, hygiene and safety of their family from the coronavirus. This is why, categories like microwave ovens, refrigerators, washing machines, and disinfecting devices are showing high demand.
To leverage this better, we are keeping a continuous tab on consumer sentiment and accordingly, are focusing on core themes of effort minimization, hygiene & health, as well as other relevant themes like environment friendliness and nation-building, which are anyway integral to our brand.
And while appliances can help in all these, the purchase has to be backed up by viable financial flexibility to the customers in these economically troubled times so that he/she can take home the appliance of his/ her choice worry-free. We, therefore, launched the 'NOW IS WOW Festival' from 1st October till 20th November 2020. It includes a plethora of offers over and above some great new products – making it a great time to buy an appliance. This is a small endeavour on our part to make the festive season a little brighter for our customers across India.
New products your company has lined up for the festive season?
Based on consumer insights, we had introduced a new line up since the beginning of the year. Be it –the tallest direct cool refrigerator series with Godrej Edge RIO and Godrej Edge NEO – for its consumers with higher storage needs, or the new age semi-automatic washing machine Godrej Edge Ultima. Despite Covid -19 related lockdowns in the country, we have kept up our impetus on offering consumers the latest in technology by launching 132 new SKUs – the majority of which were introduced during festive. Our efforts towards bringing solutions that can meet our consumers' current needs.
What are the company's future growth plans?
Owing to the pandemic, it has become even more crucial to work towards local manufacturing. In line with 'Make in India', we have been working towards upping our indigenous manufacturing capabilities and in the past 3 years, much investment has been done to ensure that we are able to move closer to 100% indigenous manufacturing. As you can see, we are not changing our launch plans or slowing down our efforts given that it will impact long-term revenues.
In the current financial year (FY21), we are optimistic about achieving our target of Rs 40,00 crore.
What are your festive expectations?
Festive sales usually comprise around 28-30 per cent of the annual sales of Godrej Appliances. While the 1st part of October was sluggish, the demand picked up since the beginning of Navratri. Industry and the brand have seen more than 20 per cent growth in Navratri. Last year Diwali was in October but this year it is in mid-November. The trend over the last few years is that there is a brisk sale in the week before Diwali. Overall, we are expecting a 10-15 per cent growth over last year during this festive season.