Onam 2013 will dawn upon the community of fast-moving consumer goods, consumer electricals and white goods traders not at the best point of times and in an environment vitiated by a combination of factors working furiously against their immediate interests.
Onam season in Kerala literally uncorks the country’s annual festival spending orgy by both individuals and households, armed as they normally are with advance salary payments (one-and-half months this year), festival bata, bonus and other savings. The State provides the favourite battleground for domestic and multinational companies who compete amongst themselves to outsmart each other devising specific selling campaigns with seasonal discounts and freebies thrown in to attract consumers.
NOT BEST OF TIMES
But the times could not get more uncertain and quirky than this time, according to traders. The rupee is plumbing to new depths by the hour, ballooning fiscal deficit has cast its shadow on spending and investments, current account deficit already has reached unimaginable levels, and growth has for all practical purposes become nil. This has invited rearguard action by the Government, which is hurting the sentiments even more.
For instance, the Centre banned duty-free import of flat screen television by air travellers effective from August 26 as part of its multi-pronged action to hold the rupee. The relevant notification said that the Government has decided to ‘disallow import of flat panel (LCD/LED/Plasma) television as part of free baggage allowance.’ The extant practice is that air travellers may bring along with them a flat screen television for personal use without paying any duty. The August 26 notification means that those bringing in TV as part of the baggage would have to pay customs duty.
Also, in order to contain the current account deficit and arrest the declining value of the rupee, the Government ordered the raise of duty on gold, platinum and silver to 10 per cent. According to P. Chidambaram, Union Finance Minister, these steps are expected to compress import of non-essential goods.
NRI WOES
A spokesman for non-residents associations in West Asia sais that airline passengers could carry one flat screen TV for personal use, either plasma, LED or LCD, worth up to Rs 35,000 as part of their baggage allowance and without incurring any customs duty. Total monthly market of TV sets in the United Arab Emirates is around 85,000, while around 20,000 of those are being carried to India. Non-resident associations termed the move to impose tax as a clear indicator of the Centre’s attitude against them. Most of those who carry TVs with them belong to the labour class, whose income is below 2000 dirhams, according to the spokesman for the associations. The Government should ideally treat NRIs with red carpets since remit millions of rupees as foreign exchange to India, he said.
Meanwhile, manufacturers of consumer and white goods – domestic or multinational – are worried whether their best laid plans for Onam selling could come a cropper, given the times they are beset with. They are raining freebies and offers - from return tickets to Dubai to Blu-ray players, LED TV, refrigerators to washing machines and other assured gifts - as they attempt to cash in on the festive season. Companies like Whirlpool, LG and Sony India are aiming for a double digit growth of sales in the State.
WHIRLPOOL INDIA
“We are aiming at a growth of 25 per cent in Kerala this Onam which translates to a turnover of Rs 200 crore,” says Shantanu DasGupta, vice-president, corporate affairs and strategy, South Asia, Whirlpool.
The company has launched aggressive marketing strategy in Kerala for Onam, which includes assured gifts, foreign trips and even help reuniting families. “Our marketing plans includes assured gifts for consumers buying a Whirlpool appliance as well as a bumper scratch card offer of 51 return tickets to Dubai for a couple.” In addition, the company will fly down 25 Keralites living in West Asia who have not visited Kerala in the last three years, helping them unite with families to celebrate Onam.
South Korean major LG is expecting a 20 per cent growth in sales during the season and is offering prizes ranging from LED TV, washing machines, refrigerators to audio systems by scratching card under its festive offer ‘Onnamante Onaghoshangal.’
LG INDIA
“Overall, we expect 20 per cent growth in sales during festive season in our focused categories. We are targeting turnover of around Rs 350 crore during Onam, which is a growth of around 15 per cent over last year,” said Sanjay Chitkara, head for corporate marketing at LG India. Chitkara said that his company was ‘betting big on flagship launches across categories which will certainly help in strengthening our market leadership.’
Despite the rupee depreciation impacting cost schedules, LG Electronics India is targeting a sales turnover of Rs 19,000 crore this year, including Rs 350 crore from Kerala. The company is expecting a market growth of 15-20 per cent this year from last year’s Rs 16,000 crore, Sanjeev Aggarwal, Sales Head, LG India, said.
“The rupee devaluation has affected the cost of products. We have taken a price hike of three per cent only while the impact is six per cent,” he said.
LG is targeting Rs 5,300 crore from across the country in refrigerator sales alone this year and has plans to introduce several new products. The Kerala market is worth about Rs 1,600 crore to Rs 1,700 crore. This year, the company was targeting Rs 750 crore from the State and a market share of 35 per cent. About 50 per cent of the year’s turnover is being contributed during Onam, he said.
SONY INDIA
Customers can purchase from any LG shop or multi-brand stores in Kerala, scratch a card and avail a chance to win prizes like LED television, refrigerators, washing machines and audio systems. P. Sudheer, regional manager, Tamil Nadu and Kerala, LG India, said customers can win over two lakh prizes on purchase of their products. The new range of Cinema 3D Smart TV and refrigerators are equipped to meet the needs of consumers who have to suffer extended power-cuts. Air-conditioners with improved Inverter V Technology are being launched to woo customers. Thirty models of LCDs in different sizes would be launched, he added.
Sony India is offering a wide range of freebies in Kerala for Onam across product categories including Bravia, Xperia, Vaio and Cybershot. It is offering free Blu-ray player, movie titles and bass headphone, cordless headphone on purchase of different TVs under the Bravia range priced from Rs 16,999 to Rs 16 lakh. Sony has launched new products just ahead of the festive season ranging from Ultra HD TV set to air conditioner with jet engine technology and new T 9000 refrigerator.
“The company expects sales worth Rs 170 crore from July-September 13, targeting a growth rate of 34 per cent over corresponding period last year,” a spokesman for Sony India said.
SAMSUNG INDIA
Korean major Samsung has launched ‘Varnavisayam’, a special promotion scheme for Onam, where it is providing assured gifts on purchase of flat panel TVs, air conditioners and washing machines.
“We will be further enhancing our panel TV and premium refrigerator range later this month,” said Atul Jain, senior vice-president, consumer electronics business, Samsung India. Whirlpool also said it is enhancing product range by launching new hi-capacity refrigerators, washing machine and microwave models.
Samsung India said it has gone for a 2-3 per cent hike in prices due to rupee depreciation. The company was looking at a 30-35 per cent growth in its last year’s turnover of Rs 27,000 crore in India.
In Kerala, Samsung is eyeing Rs 250 crore in sales turnover during the 45-day festival period and is hopeful of selling 50,000 flat TVs during Onam. Consumers can win a jackpot worth Rs 50,000 on purchase of any Samsung audio visual product or appliances, Jain added.