It's a no-brainer that festival sales account for about a third of consumer durables sold in India every year. What makes it special this year is the combination of two critical factors — a good monsoon after two straight years of drought and a salary bonanza to about 10 million government employees.
No wonder, companies in the consumer durables are confident of buoyancy in sales this festival season and are wooing buyers with a slew of new products and attractive offers.
"The industry is optimistic as companies on average have increased their marketing budgets by as much as 10 per cent this year. Consumer durable companies hope to increase their sales by almost 15-20 per cent," Manish Sharma, president, Consumer Electronics and Appliances Manufacturers Association (CEAMA), told IANS.
Analysts are also of the view that an uptick driven by the twin factors will lift volume growth for these companies.
"Normal monsoons after two years of deficient rainfall is a key positive, and along with the recent implementation of the Pay Commission recommendations, we maintain our view that 2HFY17F will see an up-tick in consumption levels," Manish Jain of Nomura Financial Advisory and Securities (India) Private Limited said in a note on Thursday.
The festival season that usually coincides with Dussehra celebrations during October and lasts for about four-five months is crucial to companies in the consumer durables space.
"In general, festive sales contribute 35-36 per cent of the annual sales for the industry," Kamal Nandi, Business Head and Executive Vice President at Godrej Appliances told IANS.
The recovery in the Indian economy has been attributed to rise in discretionary spending over the past few months, even as industrial growth remains weak.
"Consumption indicators (YoY) in domestic sales of two-wheelers (19.9 per cent); four-wheelers (16.7 per cent); petrol consumption (20 per cent); retail credit (18.5 per cent) and IIP – consumer good durables (5.9 per cent) suggest that discretionary consumption continues to improve in Q2FY17," ICICI Securities said in a note on Monday.
White goods company Panasonic is confident of doing more business this season.
"With the expected growth, our target sales for this financial year are Rs 10,800 crore ($1.6 billion). For mobiles, we are expecting the sales to grow to Rs 2,500 crore this year from Rs 1,800 crore last year. Our sales target for the festive season is Rs 1,200 crore," Ajay Seth, Panasonic India's Sales and Service Head, told IANS.
Long queues at stores selling mobile phones also indicate that revenue growth is poised to rise exponentially for companies.
The BSE Consumer Durables index comprising companies such as Titan, Whirlpool India, PC Jeweller, TTK Prestige, Videocon Industries, Rajesh Exports and Blue Star.
