Why A Weaker Rupee May Not Hurt Festive Sales
Appliance and electronics makers increased prices as a weaker Indian rupee increased costs, partially negating the benefit of lower goods and services tax on consumer durables. Electronics retail chain Vijay Sales doesn’t see that hurting festive sales.
“The price increase of 2-3 percent is negligible as most of the purchases are made through EMIs,” Nilesh Gupta, managing director, Vijay Sales, told BloombergQuint in an interview. Such a hike will hardly increase EMIs, he said, remaining optimistic about the festive season that is considered auspicious for buying everything from gold to cars.
The rupee was trading at 71.83 at 3:15 p.m., rebounding from a record low of 72.91 that the local unit hit on Sept. 12. The Indian currency has depreciated more than 11 percent this year, making it the worst performer among Asian peers. That increased the cost of imported electronic components for television to refrigerator makers. Dixon Technologies, Godrej Appliances Ltd. and Blue Star Ltd. increased prices by 2-7 percent to offset higher input costs.
“The brand owners were able to pass on the price increase marginally, particularly in the television segment,” Saurabh Gupta, chief financial officer at Dixon Technologies, told BloombergQuint in an interview. There would be a major headwind on account of currency in the LED TV segment since it is imported, he said.
The company has a strong order book for the second quarter ending September from its existing customers and was able to add more clients, Gupta said. The festival season stretches from the end of September till mid-November. “The September quarter is usually strong in the financial year as far as sales of home appliances and LED TVs are concerned,” Gupta said.
Vijay Sales’ Gupta said consumer durable manufacturers will avoid price hikes for the rest of the season. Large-screen televisions will be the flavour of festive season sales after mobile phones, he said, adding that refrigerators and washing machines have done traditionally well.
Vijay sales expect a double-digit growth in the current financial year while Dixon Technologies expects 25-30 percent growth in LED TV sales during the period.