An advertisement for Godrej Group air conditioners is displayed outside an electronics. (Photographer: Prashanth Vishwanathan/Bloomberg)

Godrej Appliances To Hike Prices Of Refrigerators, Air-Conditioners

Godrej Appliances, the consumer durables division of the Godrej Group, plans to increase prices of its refrigerators and air-conditioners by 3-6 percent due to higher input costs.

Commodity prices are hardening and therefore, there is a need to revisit prices, said Kamal Nandi, Godrej Appliances business head and executive vice-president. “We clearly foresee price increase. November and December are the two months where price increases will take place.”

He said 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 percent, plastics 6-7 percent, copper 40-50 percent, MDI—a chemical which goes into foaming—by over 140 percent, since January this year.

Besides, the tax incidence on refrigerators and air-conditioners also increased when they were placed in the highest tax slab of 28 percent under the Goods and Services Tax regime compared to 23-25 percent earlier.

The company, however, had not hikes prices then, keeping the festive season in mind. Refrigerators and ACs together contribute around 75 percent of the company's total revenue.

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 percent, 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 percent in the second half of the financial year.

With the growing demand and expanding portfolio, it aims to augment manufacturing capacity and is investing Rs 200 crore at its Shirwal plant in Maharashtra. “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 percent of its turnover on marketing, has a share of 14 percent in the overall Rs 12,000-crore refrigerator industry and about 9-10 percent share in the estimated Rs 5,000-crore washing machine industry.