Home Appliances Market in Deep Freeze

Bajaj Appliances

In despite of prices lowering by 37-40% across different product departments, sales amount of home appliances extensives such as Bajaj Electricals, Kenstar, Jaipan production and others have declined over the last
three months. Big Business Companies mention amounts are down by as much as 40%, ordering them to slash rates to be competitive. Therefore, the ground lines of these industries have taken a immense hit.

Discounts, negotiation and exchange offers have only empowered companies to scrape minimum quantity in the market. Company sources are preferring the same theory as the FMCG firms, which is that buyers are spending more and more on high-value of goods. Therefore, they are conserving on the smaller requirements like mixers, toasters, grinders, irons, pressure cookers etc. While big-value items like LED,LCD, colour televisions, air conditioners, refrigerators and washing machines are finding more takers, consumers seem fulfilled with lower quality, cheaper China-made home appliances like grinders and frying pans.

Jaipan has discarded plans to tie up with Chinese industries to market Chinese appliances in India. "Once imported, these products have to be priced on the MRP lines, and are then taxed. How can that be price competitive? We will wait till more favourable government policies are announced in this regard," a company official told ET. "Till then, it makes sense to keep a grip on business, cut costs and wait for better times."

Merchant of the Orpat brand of appliances said that the company was better placed since its products were cheaper by 25-30% compared with the other brands in the market. Shekhar Bajaj, chairman and MD of Bajaj Electricals, told ET that dropping prices was the only way to survive. "There is no alternative other than to offer competitive pricing. We have become more efficient with our back-room operations and cut costs to protect our bottom line. But the market has just failed to pick up."

Volumes of one-time majors Sumeet and Philips have taken a big hit since they have been unable to match the prices of Chinese goods. Dealers say these companies have high fixed overheads, hence they cannot reduce prices in the market.

Currently, most of these Chinese products are routed through the grey MARKET channels such as Crawford Market in Mumbai and other wholesale markets in Delhi and other areas. The Chinese products are priced more competitively because of the extremely low production costs and backward integration in the country.

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