Consumer durable companies also had a tough year

While consumers enjoyed a pleasant summer in 2011, it was bad weather for the durables industry as a slump in air-conditioner sales compounded their woes in a year in which the sector had to struggle to cope with high input costs and a weakened rupee.

According to the Consumer Electronics and Appliances Manufacturers Association (CEAMA), the estimated Rs 35,000 crore (Rs 350 billion) Indian consumer durables market, which has giants like LG, Sony, Videocon, Samsung and Panasonic, did not grow as expected, with air-conditioners being the biggest spoilsport.

"There was minimum growth. We expected that the consumer durables market will grow at around 15 per cent this year, but it grew by only 8-9 per cent," CEAMA President and Videocon Director Anirudh Dhoot said.

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Dhoot said because of "high interest rates and trouble in the economy, consumer sentiments were down, though they picked up later, especially during the festive season".

Expressing similar sentiments, the President and CEO of Samsung India Electronics, Jung Soo Shin, said the year has been a challenging one because of the foreign exchange rate situation and high commodity prices, though the firm continued to bring in new and innovative products during the period.

"For the overall industry, it is little bit tough and challenging. The air-conditioner business was a quiet one because of the weather conditions, but home appliances and televisions have shown a good growth. There was a fast transition from CRTVs to flat panels," Shin said.

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In terms of value, the air-conditioner segment is estimated to be worth around Rs 7,500 crore (Rs 75 billion), accounting for about 21.4 per cent of the overall consumer durables business in India.

At present, the air-conditioner market is currently estimated to be around 3.4 million units in volume terms, while the television segment stands at 17.5 million units, of which LCDs contribute around 4.5 million units.

To offset high input costs and the depreciating rupee, leading companies -- including LG, Samsung and Videocon -- hiked prices by up to 6 per cent across their products range during the year.

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However, the firms said the hikes were not enough and they are looking at a further hike in the near future.

"Nobody expected that the US dollar will rise in such a way and it is one of the biggest factors in raising our cost," LG Electronics India Business Head (Home Appliances) Rajeev Jain had said.

Appreciation of the US dollar against the rupee has put an additional burden on the company, as 40 per cent of its home appliances are imported from different plants located in China, Korea and Thailand, he added.

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In addition, natural disasters like the tsunami and earthquake in Japan and Thailand floods were also a cause for panic during the year, with some of the factories of leading firms like Sony, Panasonic, Canon and Nikon getting affected.

Despite the tough times, companies continued to bet big on the 3D television segment by expanding their range, tying up with content developers and introducing 3D accessories.

One of the heavy spenders on the segment was LG Electronics India, which invested Rs 700 crore (Rs 7 billion) on marketing different products during the year, of which Rs 100 crore (Rs 1 billion) was spent only on pushing its 3D range.

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Furthermore, all the major firms came out with 'Smart TVs' -- interactive television sets with in-built online content, movies and other applications. While Sony did a soft launch of the Smart TVs in 2010, the company expanded the range this year.

Meanwhile, LG and Samsung entered the space with plans to make it bigger next year.

"We are lining up a lot of advanced TVs and a lot of new models are coming in next year. However, the overall industry will continue to witness tough times at least during the first half of next year," Shin said.

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While LCDs are expected to be the growth drivers next year, companies are gearing up to expand their range in the LED segment as well.

Giving an outlook for the coming year, Dhoot said from 4 million LCD flat panels this year, the market is expected to grow to 5.5 million.

To tap the growing consumer demand, companies are also planning to bring in a range of larger 42-55 inch LED TVs, as against the 32-42 inch products available now.

"Continuing with the momentum, we have a very positive outlook for 2012 as well. We will continue to roll out innovative products, which is in line with our ideology to manufacture products that fit our brand promise," Sony India Senior General Manager Sunil Nayyar said.