December 22, 2017

MUMBAI, NOV 12: Godrej Appliances, the consumer durables division of the Godrej group, plans to increase prices of its refrigerators and air-conditioners by 3-6 per cent due to higher input cost.

Commodity prices are hardening and therefore, there is a need to revisit price. We clearly foresee price increase.

November and December are the two months where price increase will take place. Refrigerators and air-conditioners would get impacted the most and you will see there a price increase of 3-6 per cent, Godrej Appliances Business Head and Executive Vice-President Kamal Nandi told PTI.

He added that the price revision will depend on the content of raw material going into each of the product category and segment.

Prices of steel have moved up by 10-15 per cent, plastics 6-7 per cent, copper 40-50 per cent, MDI -- a chemical which goes into foaming -- by over 140 per cent, since January this year.

Besides, the tax incidence on refrigerators and ACs also increased when they were placed in the highest tax slab of 28 per cent under the goods and services tax (GST) regime from a tax rate of 23-25 per cent earlier. The company, however, had not made a price hike then, keeping the festive season in mind.

Refrigerators and ACs together contribute around 75 per cent of the companys total revenue at present.

Godrej Appliances, which had clocked a turnover of Rs. 3,300 crore, is eyeing a growth of 20 per cent this fiscal to touch Rs. 4,000 crore.

It plans to launch a slew of products across categories to drive growth.

During the first half, we have grown by more than 15 per cent, but for the second half, the growth will be much higher because there are a lot of launches that we have planned. They will start happening from the second half of this month till January. All this should drive much higher growth for our brand, Nandi said, adding that they aim to grow over 20 per cent in the second half of the fiscal.

The Housing and Urban Affairs Ministry approved the construction of 112,000 additional affordable houses for the urban poor over and above the 3,076,000 houses sanctioned earlier. That affordable housing was the flavour of the season was clearly evident from the fact that 62 per cent of all new launches in H1 2017 were in the affordable category (less than Rs 4 million price tag), with the trend of "compact homes" catching up.

With the growing demand and expanding portfolio, it aims to augment manufacturing capacity and is investing Rs. 200 crore at its Shirwal plant.

The other notable measures included provision of additional refinance of Rs 20,000 crore (over $3 billion) for the National Housing Bank (NHB), hike in housing outlay from Rs 15,000 crore to Rs 23,000 crore and allocation of Rs 396,000 crore for infrastructure development.

Now, we are investing in Shirwal plant where our premium products will get manufactured. About Rs. 200 crore investment is going to happen in the same location, where we have a plant. We are going to start the construction from this month.

By 2019 end, it should be up and running, he said.

The Shirwal plant will be adding 3 lakh refrigerators and 3 lakh washing machines in the premium segment. It will also double the capacity for medical refrigerators to 40,000 units.

The frost-free refrigerator capacity at present is 5 lakh units and fully-automatic washing machine is 2 lakh units.

The company, which spends 5 per cent of its turnover on marketing, enjoys a market share of 14 per cent in the overall Rs. 12,000-crore refrigerator industry and about 9-10 per cent share in the estimated Rs. 5,000-crore washing machine industry.

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Source: thehindubusinessline.com