FEW TAKERS

New Delhi, July 4: A double-digit inflation has prompted consumer durable companies to consider another round of price increase, despite their inventories piling up.

“The input cost has been going up consistently and inflation, too, has touched double digits. We recently raised the prices to counter this impact but with the way things are progressing, the company may have to go in for a price hike of approximately three per cent,” said Kamal Nandi, vice-president of Godrej Boyce and Manufacturing.

With inflation touching a 13-year high of 11.05 per cent, the company increased the prices of its products by 3-5 per cent last month, even after a 2 per cent hike in March. Inflation touched 11.63 per cent for the week ended June 21.

The industry has been witnessing a slowdown in demand with consumers postponing the purchase of durables because of the price hike. For instance, the demand for ACs and refrigerators has come down by 15 per cent and 10 per cent, respectively, this quarter compared with a growth rate of 30 per cent for ACs and 15 per cent for refrigerators during the previous corresponding period.

R. Zutshi, deputy managing director of Samsung India Electronics, said, “We plan to increase the prices of washing machines and refrigerators by 3-4 per cent later this month”.

However, the industry hopes to maintain the same growth momentum as last year. “Just as the increase in petrol and diesel prices have not stopped people from driving their vehicles, consumers will also not refrain from buying refrigerators and washing machines. These goods are no longer considered a luxury but a necessity,” he said.

The industry grew at the rate of about 12 per cent in the last fiscal and hopes to maintain this trend in this financial year as well.

V. Ramachandran, director (sales and marketing) of LG, said, “Entry-level products in every category is likely to witness a slowdown in demand because of the inflation.”

LG increased the prices of its products by 4-6 per cent last month on the back of rising input costs and high inflation.

Ramachandran said, “Further price hikes will depend on how the market responds to the already increased prices. We are looking at other cost-cutting measures such as using more efficient technology so that we are less impacted by the input cost hike or inflation in the future.”

However, Ramachandran added, “If inflation keeps going up the way it is doing now, we will have no other option but to look at another increase.”

Over the past four weeks, Videocon Industries has been witnessing a piling up of inventories for ACs and refrigerators totalling over 6,000 units.