White goods industry likely to degrow by 15% in FY21
In the recent Union Budget, the basic customs duty on compressors for refrigerators and air conditioners has been increased from 12.5 per cent to 15 per cent. This would impact the input cost of refrigerators and air conditioners for all imported compressors
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Price inflation in copper to impact air conditioner category by 5% and refrigerator category by 1% this quarter, says Godrej's Kamal Nandi
Price inflation in copper would impact the air conditioner category by 4-5 per cent and the refrigerator category by 1 per cent during this quarter. "The industry may degrow in the current fiscal by 10-15 per cent," says Kamal Nandi, Business Head and Executive Vice President, Godrej Appliances, President, CEAMA (Consumer Electronics and Appliances Manufacturers Association) in an exclusive interview with BizzBuzz
A sudden spike in copper price will have its impact on the price of home appliances like AC and refrigerator. Kindly tell me how much the price hike may happen and by when?
The price of copper (on the London Metal Exchange) has increased by 20 per cent from September 2020 to January 2021. The price trend continues to be bullish so far this month. This price inflation in copper would impact the air conditioner category by 4-5 per cent and the refrigerator category by 1 per cent during this quarter.
Are you looking at some other variants of copper so as to avoid the price hike?
Currently, we are not exploring other variants of copper. Since we have shifted to alternate material viz aluminium for some applications, the price impact on categories like refrigerator is lower.
What is the impact of Budget?
As a part of the recent Union Budget announcement, the basic customs duty on compressors for refrigerators and air conditioners has been increased from 12.5 per cent to 15 per cent. This would impact the input cost of refrigerators and air conditioners for all imported compressors.
Which are the parts of air conditioners and refrigerators where copper is prominently used?
In the case of air conditioners, copper is used in the manufacture of parts like condensers, evaporators, compressors, system tubing, connecting kit, wire harness and power cords. While for refrigerators, copper is used for parts like wire harness, power cord and certain compressor tubing.
Will the price hike take place across a range of products?
Yes. There has been a steady increase in the prices of raw materials by the manufacturer of steel, MDI, resins, copper and paper. The shipping container freight rates have also soared amidst the export boom. With the raw material prices hardening, the full impact of cumulative price increases will be felt in Q4 of this financial year.
What is the size of the consumer durables sector at present and how was it growing?
The first quarter of a fiscal usually contributes 35 per cent to the revenue of the consumer durable industry. However, the industry lost over 25 per cent of sales in Q1 FY21. Recovering the lost revenue of Q1 FY21 will not be easy. The industry will degrow by 10-15 percent this year to achieve approximately Rs 46,000 crore in revenues.
