Growth from rural markets has provided some respite for Mirc Electronics, the makers of the Onida brand. Its brand Igo, targeted at the rural markets, has helped in lifting revenues at time when growth has slowed down in the urban markets.
Gulu Mirchandani, Chairman and Managing Director, Mirc Electronics, says, “Compared to the urban markets we are better off in sales in the rural markets with our brand of Igo which is growing at 20 per cent (more than Onida). Today there is money in rural India and it is a good market for durable players such as us. Almost 80 per cent of the Igo’s sales are from the rural markets.”
Igo primarily has coloured televisions in the non-flat panel segment. While Onida is the company’s urban brand, Igo has been specifically created for the rural markets.
With the rupee depreciating in recent times, Onida has passed on the increased cost to its consumers. “Apart from the flat panels which are assembled here, even the local sourcing of components has become more expensive with the depreciating rupee,” he added. Currently 65 per cent of the components used for its flat TVs are imported which has resulted in costs escalating for the company.
Even in categories such as ACs which witnessed decent summer sales, the rupee fall has dampened the prospects for the category.
“Air conditioner sales were good this summer but whatever growth the segment saw was crippled by the foreign exchange rates which led to increased prices and dampening consumer demand. While AC sales have now slowed down during the monsoon, we do not expect demand to go up due to the price hike even during the festival season,” said Mirchandani.
With single digit shares across its three core categories of televisions (7 per cent), air conditioners (9 per cent) and washing machines (5 per cent), Onida has been trying to cope with competition from the MNC brands. It has now hired former head of LG’s Home Appliance, YV Verma, as CEO of Mirc Electronics.
Y.V. Verma said, “It will take me at least a month develop a clear strategy for the Onida brand but the slowdown is across all the companies in the durables sector.”
Onida has also entered new categories such as mobile phones where it has pitted itself against the domestic players rather than the MNC brands. “Currently we are reworking our strategy for smartphones which are competitively priced against Indian brands such as Lava and Karbonn,” added Mirchandani.