Indian Refrigerator Prices May Stay ‘Cool’ Despite Steel Costs
Mar 8, 2004
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This summer may not see much hike in the price of refrigerators if the fluctuation in the costs of inputs can be kept at bay, according to one Indian appliance organzation.
India's Consumer Electronics & TV Manufacturers' Association (CETMA) has reported that in view of the reduction in steel prices—approx. Rs 2,000 per ton, or U.S. $44.08—there may not be much difference in the prices of end products such as refrigerators.
"As volumes will grow, the companies would have more absorption powers," a CETMA official said. "Therefore, we do not foresee any further increase in refrigerator prices. However, if the steel prices go up in future, the industry may not be able absorb the increase in input cost leading to price increase."
Commenting on the total contribution of steel in the cost of refrigerators, industry representatives said it contributes about 7 to 8 percent.
Ajay Bajaj, product group head for Refrigerators, LG Electronics India Ltd. (LGEIL) said, "We are still assessing the situation. Currently, we would like to absorb the prices, but if there is a continuous upward trend then the prices may need to be reviewed."
Steel prices have been showing an upward trend in the past 4 to 5 months for both imported as well as domestic steel. "The customs duty reduction in the recent Budget has to some extent negated the effect," said R. Zutshi, director of Sales, Samsung India Electronics. "But in terms of overall impact, it does hike up the manufacturing costs for products such as refrigerators and washing machines for which we are importing steel sheets.
"However, we are absorbing the impact of the hike at present," he added.
An Electrolux Kelvinator Ltd. official said, "With the in the price of steel, consumer durables will see 5 to 7 percent price increase."
K. J. Jawa, vice president of the Cooling Appliances Business Division, Voltas Ltd., believes that across all brands, the category has seen a price increase, and any further increase in steel prices would lead to a price increase of Rs 400 to Rs 500 (approx. $8.82 to 11.02).
The Indian durables industry is expecting to clock a growth of 10 to 15 percent in refrigerators vis-à-vis last year, which saw a growth of less than 10 percent. (The Hindu Business Line)
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