Consumer Durables Industry in India
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Consumer Durables Industry In India
Ahsan Dileep
Consumer Durables Industry
• Consumer Durables Industry in India to post ~15% CAGR growth over next five years.
• We believe that the consumer durables industry’s growth has been two pronged :
(a) driven by lower penetration in rural markets (b) new innovations and replacement demand
in urban markets penetration in rural markets . (c) new innovations and replacement demand
in urban markets.
Key growth drivers include:
1. Favorable demographics; 64% of the population in working age category
2. Increasing Urbanization, nuclear families
3. Increase in disposable incomes; which drives consumption
4. Increasing affordability coupled with declining prices of products
5. Lower consumer product penetration
6. Availability of new products and technologies,
7. Easy financing schemes and Increase in organized retail
Industry Overview
It is a $5billion industry The products can be categorized as
follows:-White GoodsKitchen Appliances / Brown GoodsConsumer Electronics
Key Industry Dynamics
Industry Size: Rs. 350bn Key Categories: White Goods, Brown goods and
Consumer electronics. Competitive landscape: dominated by Korean
majors like LG and Samsung in most of the segments Margin Profile: Low margin, dependant on volumes Growth opportunities: Lower penetration coupled
with increasing disposable income Segmentation of consumer durables industry
TVs, Refrigerators and air conditioners constitute more than 60% of the market
Market Value Forecast
By 2013, the industry is estimated to be about $5.7billion
Expected to grow at 20%
Top 10 Companies
Nokia LG Electronics Philips Titan Samsung Whirlpool Siemens Sony Videocon Bluestar
PROFILE OF INDUSTRY
VIDEOCON INDUSTRIES REFRIGERATOR,WASHING MACHINES,T.V.,A.C, MICRO WAVE
GODREJ REFRIGERATOR, AIR CONDITIONER
WHIRLPOOL OF INDIA REFRIGERATOR, WASHING MACHINES
MIRC ELECTRONICS TELEVISION
PANASONIC TELEVISION
VOLTAS REFRIGERATOR, WASHING MACHINES
BPL LIMITED REFRIGERATOR, TELEVISION
ELECTROLUX VACCUM CLEANER, REFRIGERATOR
SAMSUNG VACCUM CLANER, REFRIGERATOR, T.V, MOBILE PHONES
HOOVER VACCUM CLEANER
LG ELECTRONICS WASHING MACHINES,REFRIGERATOR.T.V.,MOBILE PHONES
EUREKA FORBES VACCUM CLEANER
SONY TELEVISION, MOBILE PHONES, DVD PLAYER
BLUESTAR AIR CONDITIONER
BAJAJ ELECTRONICS GEYSERS, ELECTRIC FANS
NOKIA MOBILE PHONES
Key Success Factors
Strong Distribution NetworkManufacturing EdgeMarket Positioning and Branding Innovation in Advertising and
PromotionsAttractive Locations
Driving Force
Income growth Availability of financing schemes Increased affordability of products Increasing share of organized retail New variants of products Product pricing
Attractive areas for investment
High-end color TV’s Split AC’s Mobile phones
Key Consumer Durables
Share by volume Color TV sets – 30% Refrigerators – 18% AC’s – 13% Washing machines – 5% Others – 34%
Value Chain Framework
Inbound Logistics Operations Outbound Logistics Marketing and Sales Service
Overview of the top consumer durables companies
Nokia
Finnish multinational communications company
Founder – Fredrick Idestam Founded in the year 1865 at Tampere,
Finland
Products
Mobile Phones Smart Phones
Nokia 1100 handset is the worlds top selling consumer electronics product
Strengths:- Large distribution network Wide product range
Weakness:- Pricing Products not user friendly
LG Electronics Worlds second largest manufacturer of TV
sets Established in 1958 as Goldstar LG was a merger of 2 Korean companies
Lucky and Goldstar HQ – Seoul, South Korea Worldwide sales of $12.4b in second quarter
of 2010 Turnover of Rs13089 crores in India in 2009 Eyes turnover of Rs15000 crores in 2010
Launched in India – 1997 Over 300 employees in India
Products
TV’s DVD Players Refrigerators Washing Machines AC’s Mobiles
Achieves record sales of 2mn DVD writers in 2008
Awards
CNBC Awaaz Consumer Award for Most Preferred Brand – Consumer Electronics and Home Appliances(2008)
4P’s Award for Most Admired MNC in India
Philips Founded in 1891 Founders – Anton and Gerard Philips Initially manufactured carbon filament lamps HQ – Amsterdam, Netherlands Worldwide sales of €23.18 billion 123,800 employees in more than 60 countries Launched in India – 1930 at Kolkata Over 4000 employees
Products
Lighting Devices Medical Systems Domestic Appliances
Some of their inventions
Electric Shaver (1950) Compact Cassette (1962) VCR(1972)
Samsung Worlds largest electronics company Founded – 1938 by Lee Byung-Chull HQ – Samsung Town, Seoul, South Korea Worldwide revenue - $117.4billion Operations in India – Dec 1995 Revenue of $2.2 billion in 2009
Products
TV’s Refrigerators Mobile Phones
Whirlpool Fortune 500 company Established – 1911 HQ – Benton Charter Township, Michigan,
USA Annual sales of $20billion in 2009 Entered Indian market – late 1980 JV with TVS Group Annual turnover Rs1719 crores
Awards
Voted Product of the year in 2009 Award for Best Innovative Product in
Refrigerator category
Siemens Founded in Berlin in 1847 Founder – Werner Von Siemens Revenue worldwide - €76.651 billion Business volume in India Rs11,800 crores 19 manufacturing plants
Products
Hearing Instruments Home Appliances
Sony Japanese multinational conglomerate Founded – May 7 1946 Founders – Masaru Ibuka and Akio Morita HQ – Minato, Tokyo, Japan Started operations in India – Nov 1994 25% market share in India 240 exclusive outlets
Videocon Indian industrial conglomerate 3rd largest picture tube manufacturer Founded in 1979 by Nandlal Madhavlal Dhoot HQ – Aurangabad, Maharashtra, India Annual turnover - $4.1 billion
Products
TV Refrigerator Washing machine UPS / Inverter In 2009 Videocon introduced TV’s with built-in
DTH satellite receiver
BlueStar India’s largest central air conditioning
company Founded – 1943 by Mohan T Advani Annual turnover – Rs 2574 crores Market leader – Commercial refrigeration
equipment
Products
AC Refrigerator Water Cooler
Panasonic Formerly known as Matsushita Electric Co.
Ltd Founded – 1918 by Konosuke Matsushita HQ – Kadoma, Osaka, Japan Net sales of $79.4 billion, for the year ended
march 2010
Awards
Awarded SS IS01 4001:2004 for Environmental Excellence
Strengths
Strong brand equity Good supply chain Innovation
OPPORTUNITIES
The rising rate of growth of GDP, rising purchasing power of people with higher propensity to consume with preference for sophisticated brands would provide constant impetus to growth of white goods industry segment.
CHALLENGES
Heavy taxation in the country is one of the challenges for the players.
At its present structure the total tax incidence in India even now stands at around 25-30 per cent, whereas the corresponding tariffs in other Asian countries are between 7 and 17 per cent.
Poor infrastructure
It is another reason that seems to have held back the industry. Regular power supply is imperative for any consumer electronics product. But that remains a major hiccup in India.
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