Expect over 20% growth in next 3-4 years: Godrej Appliances' Kamal Nandi

Like all other industries, the steadily growing consumer electronics industry was also hit due to the pandemic, registering a degrowth of over 6 per cent last year. However, it has witnessed growth so far in 2021 over the dampened 2020. In an interview with Business Today, Godrej Appliances' Business Head and Executive Vice President Kamal Nandi speaks on industry trends as well as the company's growth. Here are the edited excerpts:

How do you think the industry has grown in the last couple of years?
Prior to the pandemic, the industry was growing between 5-11 per cent year-on-year. As the pandemic hit the country, the industry overall experienced a considerable drop in sales owing to the lockdowns and the adversely hit consumer sentiments. Last year saw a degrowth of over 6 per cent for the industry as a whole. The year so far has seen growth over last year, largely on account of the first-quarter growth. This year overall, premium segments like frost-free refrigerators and fully automatic washing machines are witnessing increased traction while the mass segments across categories continue to be muted.

The first quarter, despite the second wave, showed growth over the last year since peak sales were completely washed away due to lockdowns last year. The second quarter of April to June was leaner this year as compared to last year, which saw pent up demand from summer driving growth. By the end of H1, we were at 25 per cent growth over last year.

What have been the major trends that you have witnessed in these years and which amongst them do you foresee will follow for the next two to three years?
The industry has seen upward traction in premium products like fully automatic washing machines, frost-free refrigerators. AC category has seen rapid adoption of inverter technology. Energy labelling has been extended to deep freezers and washing machines as well. The pandemic saw greater demand for health and hygiene led features and products. Effort minimizing, convenience maximizing products and features have been driving sales, but picked up the pace further in the pandemic. (We are) Seeing a spurt in sales for categories like dishwashers, microwave ovens and washing machines as well. E-commerce sales and digitally-enabled purchase journeys have been on the rise across categories including large appliances. This too got a thrust during the pandemic

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Amidst the COVID-19 pandemic and the second wave earlier this year, what is the market sentiment for the upcoming festive season?
Festive (season) starts with Onam in the south which witnessed significant growth of 33 per cent. Navratri has been muted, however. The festive season usually contributes 30 per cent of annual sales for the industry. It is a trend we have seen over the last few years that the festive window has been narrowing and sales surge in the last week of the festive season. With salary disbursements expected at month beginning and a normal monsoon which augurs well for the rural economy, the festive week ahead should see a surge. The quarter is usually conducive to higher-end premium segments, and over the last two quarters, we have already seen overall higher traction for frost-free refrigerators and fully automatic washing machines.

With people moving back to their old routine, how do you think it is likely to impact the sales?
With fears of a third wave subsiding and the continued thrust on vaccination, people are slowly getting back to their regular routine, especially in the service sector, and in the larger cities. People are getting more confident of stepping out for regular activities like shopping. This will be helpful for the industry as the offline sales, which forms the bulk of sales, will see an uplift from more consumer footfalls.

Has the global semiconductor shortage impacted production and will dampen the festive projections?
The industry might run short of controllers owing to shortages of semiconductors and other electronic components. The domestic appliances and consumer electronics industry, facing shortages in components such as semiconductors and chips, does not see the situation resolving any time soon. Our festive projections have accounted for this, and we are doing our best to navigate the issue with appropriate risk mitigation measures

Where do you expect most of your sales to come from -- offline or online -- this festive season?
The normal contribution of e-commerce is around 8 per cent, which has increased owing to changing consumer behaviour off late. The pandemic saw a surge in ecommerce especially the last year but offline continue to form the bulk of the market for large appliances. Online sale is now expected to settle after the pandemic run, albeit at a raised threshold than pre-pandemic levels. With an exclusive portfolio being developed for the e-commerce channel, we are expecting approximately a 10-12 per cent share of buyers from the e-commerce business.

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As salary cuts and job losses have impacted the consumer segment big time, do you plan to introduce some special offers to facilitate purchases?
The festive season is marked by deals and offers and given the consumer's priority to savings, festive promotions will play an even more significant role this year. We recognize the financial anxiety a big section of our consumers is going through. In keeping with consumers' need for liquidity, Godrej has designed lucrative cash backs up to 20 per cent, multiple EMI schemes including the much in-demand Rs 1 down payment scheme, extended warranty schemes and a lot more to enable the consumer to make the purchase.

Compared to the last 2-3 years, what kind of stocks do you plan to bring to the market this year? Which will be your most popular SKUs this year and are you planning to introduce some new models in the market?
We, at Godrej, have been focusing on the health and hygiene proposition and have extended the germs and virus disinfection proposition in washing machines with our new range of Magnus washing machines this festive. We also launched a range of aesthetic glass door direct cool refrigerators and double door frost-free refrigerators. Most of our recent introductions have done really well in the segments they were launched in.

This is in line with the increased traction witnessed in the premium segments since the last few months and follows the company's foray into the premium category of dishwashers recently. We will continue to launch new products in H2 as well.

How has your brand performance been in the last few years? What is your sales prediction for the coming three or four years?
Prior to the pandemic, the company was witnessing growth rates ranging between 6-16 per cent. With a slew of new product plans across some key categories lined up over the next 2 years and aligned to the economic resurgence anticipated post the pandemic, we anticipate the next few years to be marked by significant growth for the appliances industry. The government is expected to actively revive the economy with relevant policy introductions that should fuel growth. Coupled with the revival of the private sector and employment rates, the purchase sentiments will improve.

AC category, a significant value driver for the industry, has had two tough summers and pent up demand will result in a good summer next year. The commodity prices could be a dampener, but easy EMIs should help consumers. Overall, we will be targeting a minimum of over 20 per cent growth over the next 3-4 years.

With a lot of competition, how are you looking at differentiating yourself?
Godrej Appliances has always focused on differentiation through relevant thought, through innovation that suits Indian needs at the time. The other key plank that has always been part of our product design and processes is environment friendliness. Together, these ensure that we remain true to our philosophy of 'Soch ke banaya hai' or 'Things made thoughtfully'.

Over the last year we have been focusing on delivering health and hygiene led products and features in response to the current need of our consumers -- whether it is the UVC disinfection based ViroShield or disinfecting washing machines that are tested for viruses, allergens and bacteria or disinfecting dishwashers. The new frost-free refrigerator range uses Cool Balance Technology that works on a completely revamped airflow design to deliver optimal cooling in all parts and delivers lasting freshness up to 30 days. Our advanced precision cooling medical refrigerators which help preserve vaccines, blood, plasma, etc. while not directly catering to end consumers are also serving the health of our consumers.

Our commitment to the environment runs through all our products, be it power-saving deep freezers or super-efficient ACs that use the least global warming refrigerants, super-efficient refrigerators and water-saving modes in our washing machines and dishwashers. We intend to stick to these principles to continue differentiating ourselves in the future as well.

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