LED TVs cheaper on rupee gain; home appliances dearer

The rupee’s appreciation against the dollar by four-five per cent has prompted flat-panel television makers, especially those who make light-emitting diode (LED) TVs, to cut prices of their products by an equal proportion.

Since January, the rupee has appreciated to 64.5 from 67.9 against the dollar. An appreciation of the rupee against the dollar makes imports cheaper, giving makers of durables the room to slash prices. A depreciation, on the other hand, compels them to increase prices since imports become dearer.

A substantial proportion of components — between 50 per cent and 90 per cent in TVs and home appliances — is imported. While LED TV makers — Sony to Samsung, LG to Videocon — have responded to this trend, home appliance makers have opted to raise prices. They say that commodity inflation has been steep in the past few months, making it impossible for them to cut prices.

Rising commodity prices globally, especially copper and steel, have resulted in manufacturers raising prices of home appliances such as refrigerators, washing machines and air conditioners.

“Since November last year, prices of inputs such as copper and steel have increased by about eight per cent. Most brands, including us, desisted from increasing prices since the market environment was tough following demonetisation. But input price pressures have to be passed on at some stage. Since April 1, we have increased prices by three-four per cent," said Kamal Nandi, business head and executive vice-president, Godrej Appliances.

The picture is no different for other brands in the domestic home appliances market, including Samsung, LG, Videocon and Haier. Executives of these companies say that prices have increased since the start of this financial year. Many of them see an impact on sales due to this increase, which they say is not proportional to the input cost pressures felt by them.

CM Singh, chief operating officer, Videocon, said, "Compared to the inflationary pressures we are seeing, the price increase has been partial. This had to be done since a sharp increase during the summer months of cooling products would have otherwise hit sales.”

Singh says the current price hike takes into account the paying capacity of consumers as well as the weather conditions. Given that the summer this year is expected to be hot and dry, consumers will be willing to fork out a little more to own an AC or refrigerator, he says. Sixty-seventy per cent of cooling products such as air-coolers, fans and air conditioners are sold during the summer months.

While refrigerators are comparatively spread out in terms of sales over the year, almost 33 per cent of sales in this category happen during the summer season, experts tracking the market say.

Eric Braganza, president, Haier Appliances India, said this may not be the only price increase by companies in the next few months. "While this (current) hike was long overdue, fixing tax slabs to categories in the GST regime may call for another round of hikes if the rates overshoot expectations," he said.

As things stand now, most goods including durables fall in the 12 per cent excise bracket, which is expected to increase to 18 per cent under the GST. If some products are pushed into the 28 per cent tax slab, price hikes are likely.