The spiralling fuel cost and the resultant increase in transport costs are affecting the electrical appliances sector, even as the demand has been consistently steady over the past 4-5 months, said a top official at Bajaj Electricals.
The electrical appliances sector was already grappling with the steep increase in commodity prices, as well as an increase in shipping container charges and the lack of availability of these shipping containers — all of which had worsened the sector’s supply issues.
“The availability of commodities is somewhat sorted now. But the price remains an issue... and also the logistics challenges. But the fuel costs and the transport issue in India are a much bigger issue than the container issue from China. In my view, that is a self-created issue because the fuel cost is self-created through taxes. For all of the industry, it is easily controllable,” Anuj Poddar, Executive Director, Bajaj Electricals, told
This increase in fuel costs is leading to a rise in transport costs, he explained.
Petrol and diesel prices in India had touched all-time highs recently. The demand has been consistently good during the past 4-5 months, and Poddar said he is cautiously optimistic about the fourth quarter of the financial year.
Due to steep rise in the commodity prices, the company had taken a 5-9 per cent price hike in January. But with the Budget 2021 reducing duties on steel and some related products, this can have a cooling effect on the steel prices, said Poddar.
Retail channel picking up
As the demand from urban and rural markets, for Bajaj Electricals, the urban demand has been picking up from October, and getting on par with the rural demand. “From May till September, the rural demand had increased, (while) the urban demand was soft.”
In Q3, the modern formal retail channel has started picking up, he said, while e-commerce and general trade had already been doing well.
“The only segment or channel that is not doing well right now is the government — that is the canteen store department, police canteen etc. That has been badly impacted right now.”
Amid the challenges posed by the pandemic, many companies had drastically reduced its spending on advertising.
Bajaj Electricals, too, had reduced it by around 80 per cent in the first quarter of the fiscal year.
By Q3, the company had reduced its ad spending by 20-25 per cent of what it would have normally done. Poddar expects this to get back to normal by the coming summer.