While fast-moving consumer goods, media, telecom and financial services have all registered solid rural growth, consumer durables seem to be lagging behind, says a study.

Burdened by several price hikes, lack of discounted offers, and inadequate consumer finance, the consumer durable industry witnessed a de-growth of 6 per cent in calendar year 2011 in the rural markets, according to a study by rural consultancy MART.

The study covered 24 villages and 24 small towns across four regions – Uttar Pradesh, Maharashtra, Andhra Pradesh and West Bengal.

Mr Pradeep Kashyap, CEO, MART, said: “Television is no longer seen as a dowry item in the rural areas because the penetration levels are already very high.” He said rural areas have now upgraded to microwaves or water purifiers, and are not buying second or third televisions. Also with the upgradation to LED and LCD TV, companies are no longer promoting basic models even in rural areas.

Owing to rising input costs, the consumer durables industry saw 4-5 price hikes last year and had no discounted offers on the table. The report also puts the points to poor industry performance on low farm profitability leading to postponement of purchase decisions.

Lack of awareness of consumer finance options too was pegged as a reason. “All India, almost 14 per cent of the consumer durable purchase happens through a finance option, out of which a meagre 2 per cent is accounted for by rural areas,” said Mr Pankaj Mishra, Partner, Mart.

Korean company LG had close to 400 offices in the remote areas and have closed many of them, as they did not foresee business in the rural areas, added Mr Mishra. When contacted, LG, however, denied this and said its rural sales were alright. Korean peer Samsung too brushed aside the report. “We are seeing healthy sales in rural markets. Accessibility is growing and companies are betting on rural purchasing power,” a Samsung spokesperson said.

However, Godrej and Boyce did corroborate that sales were depressed. “Overall the sentiment is low since February. Sale of cooling products has not been encouraging in the rural market. Refrigerators and air conditioners, the two category that we are strong in, is seeing a de-growth. AC is not a rural product and the cold wave that some parts are witnessing has put a brake on refrigerator sales also,” said Mr Kamal Nandi, Vice President, Godrej and Boyce said.

Industry watchers, however, note that the two major financers Bajaj Finance and Sundaram Finance have been seeing flat growth. “Rural buying pattern usually involves paying cash upfront but the financing companies are seeing flat growth in the rural markets they operate in. This may indicate that rural market too is putting buying on hold,” said an analyst.

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