A

BRIEF REPORT
ON
CONSUMER DURABLES INDUSTRY IN INDIA
May, 2014

A brief report on C
Consumer Durablee Industry in Indiaa

1. O
OVERVIE
EW OF CONSUM
C
MER DUR
RABLES M
MARKET
T

1.11

Overvieew
Shares in tthe consumer
durrables mark
ket in India (FY14)

o become th
he fifth largest consumerr
India is expected to
he world; th
he market is expected to
o
durable market in th
U 12.5 billlion by FY 15
1 from USS$ 7.3 billion
n
reach US$
in FY 122.

Rural,
R
35%

Urban markets
m
acccount for th
he major sh
hare (65 perr
cent) of
o total revvenues in the
t
consum
mer durabless
Urban
n,
sector in
n India. Deemand in urban markets is likely to
o
65%
increasee for non-essential prodducts such ass LED TVs,
laptops,, split ACs and beauty and wellness products.
In ruraal markets, durables like refrigeerators andd
consum
mer electron
nic goods are
a likely to
t witness high demaand in the coming yeears as thee
Govern
nment of Inddia plans to invest
i
signifficantly in ruural electrificcation.
F allowed in the electrronics hardw
ware-manuffacturing secctor under th
he automaticc route. Thee
100% FDI
consum
mer durabless sector rakked in reven
nues worth US$ 7.3 billion
b
in FY
Y12. Growtth has been
n
healthy over the yeears, recordin
ng a compo
ounded annuual growth rate
r (CAGR
R) of 10.8 peer cent overr
bles market is
i expected to
t double att 14.8 per ceent CAGR to
o reach US$$
FY03-12. The consumer durab
n FY10.
12.5 billlion in FY155 from US$ 6.3 billion in
m
acco
ount for thee major sharre (65 per ceent) of total revenues in
n the consum
mer durabless
Urban markets
sector in India. Deemand in urrban markets is likely tto increase for nonesseential produucts such ass
T
laptopss, split ACs and, beautty and welln
ness produccts. In rurall markets, durables
d
likee
LED TVs,
refrigeraators as weell as consumer electro
onic goods are likely to
o witness ggrowing dem
mand in thee
coming years.
Sizeoftheconsumerdurablessmarket(U
USDbillion)
8
6
4

7.3

7.3

FY11

FY12

6..3

3.2

3.5

3.8

4..2

FY04

FY05

FY06

FY07

4.7

5.2

2
0
FY08

FY09

FY10
0

* Laatest data as avaiilable

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A brief report on Consumer Durable Industry in India

This sector is expected to post a CAGR of 15% over 2010-15. Growth in demand from rural and
semi-urban market is estimated to outpace demand from urban market for consumer goods.
Consumer durables market is estimated to expand at a CAGR of 14.8 per cent to US$ 12.5 billion in
FY15 (from US$ 7.3 billion in FY11). Rural and semi-urban markets are likely to contribute a
majority of consumer durables sales.
1.2

Key Categories
The Indian Consumer Durables segment can be segmented into three groups:

White Goods
Categories

Brown Good
Consumer
Electronics

White goods
Air conditioners
Refrigerators
Washing Machines
Sewing Machines
Watches and clocks
Cleaning equipment
Other domestic appliances

Brown goods
Microwave Ovens
Cooking Range
Chimneys
Mixers
Grinders
Electronic fans
Irons

Consumer electronics
TVs
Audio and video systems
Electronic accessories
PCs
Mobile phones
Digital cameras
DVDs
Camcorders

Brown goods

This is a highly penetrated market

Electric fans are an essential utility for more than six months of the year in most parts of the
country

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A brief report on C
Consumer Durablee Industry in Indiaa

Househ
hold Appliaances Indu
ustry Size (in
n Rs Billion
n)

v
audio
o and gamiing device market is expected to
o grow to a value off
Indias domestic video,
main the co
ore product iin this categgory, with sp
ports eventss such as thee
US$21.77bn in 2015. TV will rem
2011 IC
CC Cricket W
World Cup driving
d
demaand for TV set upgrades.
1.33

Markett Share by Segments

S
(E
Electronicss)

* Latest data
da as available

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A brief report on Consumer Durable Industry in India

2. MAJOR PLAYERS
2.1

Samsung India
Samsung India commenced its operations in India in December 1995, today enjoys a sales turnover
of over US$ 1 billion in just a decade of operations in the country. Samsung design centres are
located in London, Los Angeles, San Francisco, Tokyo, Shanghai and Romen. Samsung India has its
headquartered in New Delhi and has a network of 19 Branch Offices located all over the country.
The Samsung manufacturing complex housing manufacturing facilities for Colour Televisions,
Colour Monitors, Refrigerators and Washing Machines is located at Noida, near Delhi. Samsung
Made in India products like Colour Televisions, Colour Monitors and Refrigerators are being
exported to Middle East, CIS and SAARC countries from its Noida manufacturing complex.
Samsung India currently employs over 1600 employees, with around 18% of its employees working
in Research & Development.

2.2

Whirlpool India
Whirlpool was established in 1911 as first commercial manufacturer of motorized washers to the
current market position of being world's number one manufacturer and marketer of major home
appliances. The parent company is headquartered at Benton Harbor, Michigan, USA with a global
presence in over 170 countries and manufacturing operation in 13 countries with 11 major brand
names such as Whirlpool, KitchenAid, Roper, Estate, Bauknecht, Laden and Ignis. Today,
Whirlpool is the most recognized brand in home appliances in India and holds a market share of
over 25 per cent. The company owns three state-of-the-art manufacturing facilities at Faridabad,
Pondicherry and Pune.

2.3

LG India
LG Electronics was established on October 1, 1958 (As a private Company) and in 1959, LGE
started manufacturing radios, operating 77 subsidiaries around the world with over 72,000
employees worldwide it is one of the major giants in the consumer durable domain worldwide. The
company has as many as 27 R & D centers and 5 design centers. Its global leading products include
residential air conditioners, DVD players, CDMA handsets, home theatre systems and optical
storage systems.

2.4

Godrej India
Godrej India was established in 1897. The company was incorporated with limited liability on March
3, 1932, under the Indian Companies Act, 1913. The Company is one of the largest privately-held
diversified industrial corporations in India. The Company has a network of 38 Company-owned
Retail Stores, more than 2,200 wholesale dealers, and more than 18,000 retail outlets. The company
has Representative Offices in Sharjah (UAE), Nairobi (Kenya), Colombo (Sri Lanka), Riyadh (Saudi
Arabia) and Guangzhou (China-PRC).

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A brief report on Consumer Durable Industry in India

2.5

Sony India
Sony Corporation, Japan, established its India operations in November 1994. In India, Sony has its
distribution network comprising of over 7000 channel partners, 215 Sony World and Sony Exclusive
outlets and 21 direct branch locations. The company also has presence across the country with 21
company owned and 172 authorized service centres.

2.6

Hitachi India
Hitachi India Ltd (HIL) was established in June 1998 and engaged in marketing and sells a wide
range of products ranging from Power and Industrial Systems, Industrial Components &
Equipment, Air Conditioning & Refrigeration Equipment to International Procurement of software,
materials and components. Some of HILs product range includes Semiconductors and Display
Components. It also supports the sale of Plasma TVs, LCD TVs, LCD Projectors, Smart Boards
and DVD Camcorders.

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A brief report on Consumer Durable Industry in India

3. GOVERNMENT INITIATIVES
3.1

Recent Developments/ Investments

To acknowledge the fast growing online consumer base, Multi Screen Media (MSM) has recently
launched its video-on-demand service Sony LIV. The new offering aims at providing
entertainment on the go for young India. Apart from enhancing the way entertainment is
consumed in India, this user-friendly and interactive application is also a great platform for
brands to strengthen their engagement and interaction with young consumers. The Sony LIV
application is available globally for free, online on sonyLIV.com and for download on major
App stores iTunes and Google Play

Samsung has launched curved televisions in the Indian market priced between Rs 100,000
449,000 (US$ 1,667.637,487.65) to tap high-end buyers. Under its curved range, the company is
offering a range of 10 television models with ultra-high definition (UHD) and LED
technologies. This technology should get adopted, we feel very strong. Its a global trend.
People are now looking at much and much better picture quality and immersive nature of the
TV, which we do not have till now.

Kerala-based Paragon, which helped popularize branded rubber chappals in India, is now
actively looking at new growth drivers. The Rs 1,400 crore (US$ 233.38 million) footwear maker
is diversifying into trendier products such as sports shoes and non-leather formal footwear,
before finally stepping into the larger leather footwear market.

Canon India plans to get into the network security camera market. We have made forays into
photo albums, cinematography and medical imaging. Sometime later this year, we will launch our
first product in the Indian security camera market.

Amul has clocked its highest ever growth in FY 2014, riding on a sharp rise in exports and entry
to new markets. We have achieved 32 per cent growth in our annual turnover which is the
highest ever growth since it was set up in 1973.

Amway India plans to increase its proposed investment in its Tamil Nadu facility, with more
production lines to manufacture its complete range of nutrition and beauty products. The
company will invest Rs 150 crore (US$ 25 million) over and above the originally proposed Rs
400 crore (US$ 66.67 million) in the manufacturing facility that is coming up at Nilakottai near
Madurai. It is expected to start commercial production by the end of 2014.

UK-based Reckitt Benckiser, the household goods manufacturer that sells Dettol antiseptic and
Harpic toilet cleaners in India, among other brands, has set a target to reach over 200 million
people by 2020 to improve their health and hygiene behavior.

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A brief report on Consumer Durable Industry in India

3.2

Government Initiatives
The Indian Government is majorly concerned about the development of rural markets and hence,
keeps introducing policies and initiatives to encourage their growth.
In a bid to make economic development inclusive, the Indian Government has initiated many
schemes and programs that aim at improving the standard of living in India villages or rural areas.
For instance, the Government launched a time-bound business plan for action called Bharat Nirman
for enhancing the infrastructure in hinterlands. Under this program, action is proposed in the areas
of Water Supply, Housing, Telecommunication and Information Technology, Roads, Electrification
and Irrigation.
Apart from that, the Government is considering enhancing the authorised capital of National Bank
for Agriculture and Rural Development (NABARD) to Rs. 20,000 crore (US$ 3.71 billion) from Rs.
5,000 crore (US$ 928.49 million). The increase in authorised capital is aimed at enhancing the
operations and broadening the scope of activities of NABARD.

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A brief report on Consumer Durable Industry in India

4. CHALLENGES, OPPORTUNITIES & FUTURE PROSPECTS

4.1

Challenges and Opportunities

The consumer durables sector in India is one that will be passing through some very interesting
times. On the one hand there is substantial scope for expansion as the favourable demographics of
India are a positive for the sector.
On the other hand there are factors like increasingly expensive raw materials as well as competition
that will have a detrimental effect on the sector.
But there are issues that the sector will have to face and the rising interest rate regimen is one of the
first. Consumer durables are slightly interest rate sensitive. So, the current high interest rate scenario
means that some sluggishness in demand can be expected.
But, rising incomes have been pushing up the demand for consumer durables in India and,
therefore, I will not be surprised, if demand sustains, though at a slightly reduced rate.
Another factor that is going to affect the sector is competition. There is intense competition among
players leading to higher ad spends and lesser pricing power, thereby lowering margins. While
market leaders in the various categories are emerging, the other companies are finding that it is a
tough going.
And the raw material scenario for the sector too is going to be problematic for the sector. Raw
materials, as inputs vary as much as there is variety in consumer durables. Some of the main inputs
are natural rubber used in tyres, and metals & polymers, which constitute the body and/or the
electrical/electronic components.
With continuous changes in the psychographic and demographic profile of the consumer, the raw
materials as well as the products are required to undergo persistent changes to meet not only the
varying demand, but also to meet the packaging and transportation needs, to improve the time and
place utility of the product, as well as in product differentiation. This would mean that consumer
durable sector would continue to rely heavily on advancements in technology.
Since the industry is likely to do well for many more years to come, investing in stocks in the
industry, when the prices correct would be a good idea.

Domestic markets are growing at a brisk pace with continued dependence on imports.
About 30-35% electronic components required for local equipment manufacturing are
available from domestic sources. For semiconductors, there is almost 100% dependence on
imports.
Inverted Duties due to dual use of Inputs such as Plastics, Copper, Aluminium, etc continue
to plague hardware manufacturers. Specific items are covered under Customs Notification
25/99, although the procedure for claiming this benefit is extremely convoluted and time
taking

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A brief report on Consumer Durable Industry in India

4.2

Domestic Taxes and Levies impose Fiscal Disabilities with very high indirect taxes
Cascading impact of CST on components detrimental for finished products manufacturing
High cost of Finance, Power and Logistics/ Regulatory and Procedural problems add to
disabilities estimated at 7-8%. This discourages capital intensive, high value add investments
in manufacture of components / parts which require high and long term investments
necessitating a supportive fiscal and infrastructural environment.

Swot Analysis

4.2.1 Strengths
Presence of established distribution networks in both urban and rural areas
Presence of well-known brands
In recent years, organized sector has increased its share in the market vis a vis the
unorganized sector.
4.2.2 Weaknesses
Demand is seasonal and is high during festive season
Demand is dependent on good monsoons
Poor government spending on infrastructure
Low purchasing power of consumers
4.2.3 Opportunities
In India, the penetration level of white goods is lower as compared to other developing
countries.
Unexploited rural market
Rapid urbanization
Increase in income levels, i.e. increase in purchasing power of consumers
Easy availability of finance
4.2.4 Threats
Higher import duties on raw materials imposed
Cheap imports from Singapore, China and other Asian countries
4.3

Future Prospects
India is emerging as the third largest internet market and its e-commerce business is likely to touch
Rs 4,000 crore (US$ 742.76 million) in 2015 against Rs 1,200 crore (US$ 222.83 million) at present.
Also, with mobiles becoming a major medium for advertising and content delivery, every three out
of four users in the country are expected to access the net through a mobile phone by 2015. During
2012-22, cumulatively around US$ 500 billion of ad spend is expected to happen on mobile phones,
according to industry estimates.
Moreover, companies in the last decade have positioned tea and coffee as recreational products,
which have majorly attracted younger population. Growing at a compounded annual growth rate

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A brief report on Consumer Durable Industry in India

(CAGR) of 20 per cent, it is expected to touch Rs 33,000 crore (US$ 6.13 billion) by 2015 from the
current level of Rs 19,500 crore (US$ 3.62 billion) (in 2011).. Domestic coffee outlets, which have a
lot of appeal for the new generation, are set to double over 2012-15, majorly driven by the foray of
global players such Starbucks and Dunkin Donuts in India.
Upcoming Investments by Major Players (USD billion)

375

LG

208.3

Panasonic
Videocon

12.5

Haier

10.4
8.3

Blue Star

3.1

Whirlpool
0

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50

100

150

200

250

300

350

400

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