Panasonic India plans to shift focus from the B2C (Business to Consumer) segment to the B2B (Business to Business) segment in India in order to beat rupee depreciation and improve profit margins.
B2B is a transaction where a company provides goods or services for another company as opposed to a transaction involving a retail consumer.
Revenues for the Japanese company have always tilted towards the B2B segment to derive better profitability, unlike in India where it continues to generate bulk of its revenues from retail consumers.
Manish Sharma, Managing Director, Panasonic India, said, “It is due to the exchange rate fluctuations that we want to focus more on the B2B segment, which can help in expanding our margins and lead to better profitability.”
Almost 85 per cent of Panasonic’s global revenues come from the B2B segment. In India, the business is dependent on the B2C segment which accounts for 95 per cent of its revenues.
“In the B2B segment, the costs are lower as there are no advertising budgets and distribution expenses. We are dealing directly with the end customer and there are no intermediaries. This makes it easier to expand, especially at time when there is pressure on the rupee. We want to increase revenues from the B2B segment to 50 per cent by 2018,” said Sharma.
Being forced to increase prices by 4 per cent like other consumer durables retailers, due to the high cost of imports, Panasonic has decided to increase its local production. “If the rupee continues to depreciate, we may have to again pass it on to the consumer. The fall of the rupee hits us heavily, and we are trying to have more production from excise free zones,” added Sharma.
Having achieved break-even last year, Panasonic India continues to be funded by its parent company in Japan. “While we are still funded by Japan. We hope to stand on our own by fiscal 2014,” said Sharma.