Electronics production as % of GDP

CONSUMER DURABLES

Ajit SinghJeet PradhanAnkit SachdevPankaj ShuklaRaj KhushwaHarshal ChaturvediPresented by:WHAT ARE CONSUMER DURABLES ???? Consumer durables are the products whose life expectancy is at least 3 years. These products are hard goods that cannot be used up at once.

Overview of Indias Consumer Durables MarketThe Indian consumer durables can be segmented into three key groups

Performance In Last 10 YearsThe global market has witnessed a surge in demand as economies such as Brazil, Mexico, India and China have opened up and begun Rapid development, welcoming globalization

Industry suffered during the 2008-2009 period

Projections for current year are very optimistic, as consumers resume spending, new enticing variants to grab new customers

Consumer Financing (Credits & Loans)

Change in Policy by WTO (Taxes Benefits)

Entry of heavyweight retail players is increasing the competition

In the past 10 years, the global market has witnessed a surge in demand as economies such as Brazil, Mexico, India and China have opened up and begun rapid development, welcoming globalization with lan. The consumer durables industry has always exhibited impressive growth despite strong competition and constant price cutting, and the first contraction since the 2001 dot-com bust has been due to the global recession. Given the strong correlation between demand for durables (both new and replacements) and income, the industry naturally suffered during the 2008-2009 period. However, projections for current year going forward are very optimistic, as consumers resume spending, and producers launch new enticing variants to grab new customers. Leading players include Sony Corporation, Toshiba Corporation, Whirlpool Corporation and Panasonic Corporation.Developing countries such as India and China have largely been shielded from the backlash of the recession, as consumers continued to buy basic appliances. In fact, China has been ranked the second-biggest market in the world for consumer electronics. Despite the recession, their strong domestic economy and growing high-income population have buoyed demand leading to aggressive market growth.There is growing interest for new age products such as LCD-TVs and DVD players. Meanwhile, the penetration of the basic, largest dollar items such as ovens, washing machines and refrigerators is also increasing. India too, has witnessed a similar phenomenon, with the urban consumer durables market growing at almost 10 %p.a., and the rural durables market growing at 25% p.a. Some high-growth categories within this segment include mobile phones, TVs and music systems.The Indian consumer durables industry has witnessed a considerable change in the past couple of years. Changing lifestyle, higher disposable income coupled with greater affordability and a surge in advertising has been instrumental in bringing about a sea change in the consumer behavior pattern. Apart from steady income gains, consumer financing and hire-purchase schemes have become a major driver in the consumer durables industry.In the case of more expensive consumer goods, such as refrigerators, washing machines, color televisions and personal computers, retailers are joining forces with banks and finance companies to market their goods more aggressively. In addition, change in policy, such as the WTO FTA in 2005 resulted in zero customs duty on imports of all telecom equipment, thereby improving the pricing and affordability of imported good6Consumer Durable Industry In IndiaIndian Market Size is over US$ 9.5 Billion

India has been ranked fourth in consumer electronics

Strong domestic economy and growing high-income population

Urban consumer durables market growing at almost 10 %p.a., and the rural durables market growing at 25% p.a.

Huge domestic market and growing

Economic outlook : 7.5% growth in 2008-09 (Year of Recession)

Consumer Durable Industry in IndiaBurgeoning middle class

Government working towards improvements in infrastructure,

Rural electrification and implementation of goods and service tax

Skilled low cost manpower

World class standards of productivity

Issues domestic industry is grappling with

Tax incidence to the extent of 30%

Anomalies in import duties, because of implementation of FTAs

Competitiveness of component industry

Key growth driversRise in disposable income

Increased affordability of products

Increasing share of organised retail

Availability of easy financing schemes

Entry of heavyweight retail players is increasing the competitionProduction as % of GDP

Source: CEAMADemand of Consumer DurablesSource: CEAMAKey Consumer Durables- Share by VolumeSource: CEAMAGrowth in 2009-10 Consumer Durables Growth Air Conditioner 20-25% Refrigerator 5-10% Microwave Ovens 25%Washing Machines 5-10% Color Televisions (CTVs) 15-20% Black & White Televisions -20%Clock 10%Watch 10%VCDs 30%Consumer Electronics (Overall) 9%Source: CEAMASignificant growth opportunitiesThreat of New EntrantsMost current players are global playersNew entrants will need to invest in Brand, Technology and Distribution

Competitive RivalryNumber of well established players, with new players enteringGood technological capabilityMany untapped potential marketsSignificant Growth OpportunitiesCustomer PowerMultitude of brands across price points - wide variety of choice for customers

Supplier PowerIndigenous supply base limited - most raw materials are imported

Threat of SubstitutesUnbranded products and cheaper imports could enter the marketStrong growth expectedProjected Growth Rates Colour TVs (LED, LCD, Plasma)25-30%Refrigerators

18-22%Washing Machines15-20%

Air Conditioners

32-35%Others35-40%Source: CEAMAAttractive areas for investment High End TVsPlasma display panels and liquid crystal display TVs have registered an average growth of more than 100 per cent in 2010-11 and the trend is expected to continue Split Air-conditionersSplit ACs have been growing at a much faster rate than Window ACs - Growth of 97 per cent in 2010-11 as compared to a 32 per cent growth of Window AcsMobile PhonesThe mobile phone market grew at 29 per cent in 2010-11, over the previous year. The market is expected to grow at a CAGR of about 28.3 per cent from 2011 to 2013Distribution and RetailWith the rural and semi-urban markets creating opportunity and an almost sedentary urban market, the need to have a strong distribution network is crucial for the companies to remain price competitiveAttractive States for InvestmentKey parameters used for determining attractiveness of states: Incentives for manufacturing sector Consolidation of factors, including skilled workforce Proximity to demand centres Proximity to ports for raw material imports

Maharashtra, Uttar Pradesh and Tamil Nadu are attractive locations for investment in manufacturing consumer durables.Future ProspectsOverall, the industrys future remains robust, and interested applicants will benefit from a holistic learning experience

Many of the research, sales, marketing and advertising related roles will necessitate a good on-the-job learning of target audiences, who may well be a totally new segment, based in never-before visited Class II and III towns.

In addition, those with technical backgrounds will be able to leverage their knowledge and experience to constantly develop and innovate the product variants.

With more MNCs growing their Indian businesses, there is great potential to also learn best-in-classsystems and management skills.Future Prospects contConsumer durables sector is characterized by the emergence of MNCs, exchange offers, discounts, and intense competition. The market share of MNCs in consumer durables sector is 65%. MNC's major target is the growing middle class of India. MNCs offer superior technology to the consumers , whereas the Indian companies compete on the basis of firm grasp of the local market, their well-acknowledged brands, and hold over wide distribution network

MAJOR PLAYERS IN CONSUMER DURABLE INDUSTRY

Top players in consumer durable industry:

Nokia IndiaLG Electronics India LimitedPhilips IndiaTitan IndustriesSamsung India ElectronicsWhirlpool AppliancesSiemensSony IndiaVideocon IndustriesBlue StarGodrej

Nokia India:Nokia India is a world leader in mobile phone industry and they have built a diverse product portfolio with a view to meet the mobile phone requirement of different types of consumer. Their product ranges from an entry-level mobile phone to an advance mobile phones with several applications and multimedia facilities like gaming, music and imaging.LG Electronics India Limited:LG Electronics India Limited came into existence in the year 1997 and they have manufacturing units at Pune, Delhi and greater Noida for manufacture of consumer durable goods like televisions, IT products, vacuum cleaners, audio devices, microwave ovens, washing machines, refrigerators, air conditioners, etcPhilips India:Philips India are leaders in the production of different consumer durable products like domestic appliances, personal care products, etc Their product range includes household products, kitchen appliances, personal care products, accessories, phones, PC products, portable entertainment and televisions.Titan Industries:Titan Industries came into existence in the year 1984 and it is a joint venture between Tamil Nadu Industrial Development Corporation and the Tata Group. They are dealing with consumer durables like sunglasses, jewelry and watches. Their jewelry business is being done in the name of Tanishq.Samsung India Electronics:Samsung India came into existence in the year 1995 and they are dealing with different businesses like household business, consumer electronics business and IT business. Their product range includes washing machines, refrigerators, color monitors and color televisions.Whirlpool Appliances:Whirlpool Appliances came into India in the late 1980s and this company was established in joint venture with TVS group. They are having their business in 170 countries and in the year 1995, they acquired Kelvinator India Ltd, which was a consumer durable company by itself.Siemens:Siemens have their operations in more than 190 countries and they have an employee base of more than 4 lakh employees all over the world. They have more than 15 sales offices and manufacturing units in India. They are engaged in different businesses like lighting, transportation, healthcare, information and communications, energy and automation & control.Sony India:Sony India came into existence in the year 1994 and they have more than 7000 channel partners, more than 200 Sony exclusive outlets in the name of Sony World and more than 20 direct branch locations. They are dealing with nearly 20 different products in the consumer durable industry in India.Videocon Industries:Videocon is actually based in India and they are dealing with a variety of home appliances and consumer electronics. Their product variety include consumer electronics, glass, Thompson products, Oil & gas.Blue Star:The main product dealt by Blue Star is central air conditioners. They are the leading producers of Air-conditioners in India and they have made their presence felt in different countries like Africa, South East Asia and Middle East.These consumer durable companies are operating with the main objective of meeting the requirement of a wide range of consumers belonging to different financial strata and these companies have reached this place mainly because of the satisfaction they offered to their customers.

23Profiles of key Indian Consumer Durables PlayersBluestar Largest central air conditioning company with a network of 23 offices, 4 modern manufacturing facilities and around 2,000 employees Established leadership in the field of commercial refrigeration equipment ranging from water coolers to cold storages The company plans to increase its production capacity by setting up a new manufacturing plant at Thane and enhance its product range, which includes developing special purpose products and comfort applicationsMIRC Electronics Commands strong brand equity among consumers, largely owing to the success of its Onida brand Finest design has made the company a leading player in the electronics and entertainment business today Planning to set up a manufacturing plant in Uttaranchal for manufacturing various consumer electronic products

Voltas Offers engineering solutions in areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, machine tools, mining and construction equipment, materials handling, water management, building management systems, indoor air quality and chemicals Operations have been organized into four independent business specific clusters: air conditioning and refrigeration, unitary products, engineering products and international operations Tied up with RBS Home Appliances Ltd for the use of 640 service centres that Voltas has across the country for after sales services

Videocon Market leader of consumer electronics and home appliances in India - manufactures home appliances such as refrigerators, microwave ovens, compressors, ACs and washing machines Planning to acquire Daewoos consumer electronic businesses worldwide to bring LCD TVs, Plasma TVs and components into its fold and also helps in having a consuming partner for the recently acquired Thomsons picture tube business

Bajaj Electricals Engaged in marketing of various consumer household and industrial goods Manufactures erection and commissioning of transmission line towers, telecom towers, mobile telecom towers and wind energy towers Planning to outsource manufacturing of gas appliances and water dispensers, which will be marketed under its own brand Planning to introduce inverters and two new lines of business

Key Problem Areas In IndustryInadequate stress on R&D

Quality - Yet an issue

After Sale Service & Customer Satisfaction

Action for Industry for GrowthCommit sufficient resources for R&DNeed to be more quality consciousNeed to improve After Sales ServicesNeed to Build economies of ScaleExplore exports as a viable option.More emphasis to develop Rural Market

Conclusion It Contributes more than 5.5% to index of Industrial Production

It provides jobs to lakhs of professionals, Skilled, Semi Skilled and unskilled workers, particularly women.

It improves the quality of life of people by providing Entertainment / information / education / comfort and helps reduce daily chores, particularly for housewives. But the importance of the sector in National Economy remains unnoticed.

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