To counter the impact of rising raw material prices, manufacturers of white goods have raised prices for the third time this year. According to industry experts, manufacturers could raise prices again in the new year, Business Standard reported.
White goods are major household appliances such as air conditioners, washing machines, televisions and refrigerators.
Despite rising prices of around 12-13% earlier this year, durable consumer goods companies have not been able to fully cover the rising costs.
Commodity costs have increased by around 20% in 2021, while the increase in commodity prices has only been limited to 12-13% so far, according to the report citing Kamal Nandi, chief Corporate and Executive Vice President of Godrej Appliances.
Godrej Appliances, which already hiked prices 3-4% in December, expects another increase next month for refrigerators, washing machines and air conditioners.
Nandi said the company has avoided raising prices during the holiday season because it will dampen demand.
TV maker Super Plastronics, which makes the Thompson brand of TVs, will raise prices 5-7% in January if the component shortage persists.
Although the prices of commodities such as steel, aluminum, copper and crude oil have fallen by as much as 15% since October, they are still at higher levels. Between January and October, the prices of these raw materials had risen sharply between 25 and 140%.
Meanwhile, manufacturers of consumer durables are concerned that the spread of the Omicron variant of the coronavirus could disrupt the supply chain and affect the supply of components.
âWe are not facing any problems at the moment. We used to stock 15 days of components, but now we’ve increased it to 45 days, âNandi told Business Standard.
So far, consumers have absorbed the price increases, but durable consumer goods companies will need to take a cautious approach while planning further price increases, experts said.
“The moderation of the competitive intensity in the coming months is essential because it is essential for the potential price increases, and therefore better profitability for the whole industry,” Moneycontrol said, citing brokerage firm Emkay.
Price hikes in the last nine months of this fiscal year and improving demand will likely contribute 8-10% revenue growth in the December quarter, Moneycontrol reported.
Meanwhile, a Crisil report released earlier this month indicated that manufacturers of consumer durables are expected to experience 20% revenue growth this fiscal year, Mint reported. During the last fiscal year, the sector, which includes consumer electrical appliances (excluding mobile phones) and white goods, recorded a turnover of Rs 2,000 billion.
Positive consumer sentiment and higher achievements will drive growth momentum in this fiscal year and lead to 14-15% revenue growth for white goods, according to the report.
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(Edited by : Thomas abraham)