CHAPTER 3: INDUSTRY PROFILE

3.1 Household Electrical Appliances Industry- Background

Indian Brand Equity Foundation [IBEF] (2007)124 states that the consumer durable
industry is one of the fastest growing industries in India. Indian Urban and rural markets
are growing at the annual rates of 7%–10% and 25%, respectively, with organised retail
expected to grow by 10% to 15% (Naukri Hub) 125 . This is due to the rise in the
disposable income, consumer financing becoming easier, vast choice available and
foreign players like LG, Sony, Samsung, Whirlpool, Daewoo, Aiwa entering the Indian
market.

Fig 3.1:- Household Electrical Appliance Industry Sales

Source: Report by KPMG Advisory Services Private and Indian Brand Equity Foundation
(IBEF) (2007)

124
KPMG_Advisory_Services_Private. Consumer Durables. Indian Brand Equity Foundation(IBEF).
2007.
125
Naukri_Hub. Consumer Durables Industry. 22 December 2013 http://www.naukrihub.com/india/
consumer-durables/.

45
The report states that advancement in technology and increasing competition are
narrowing the price gap and the once expensive appliances are becoming cheaper.

Fig 3.2:- Price Trends of the Electrical Appliances in recent years

Source: Suresh Khanna, Secretary General, CETMA

The Economic Services Group, National Productivity Council, New Delhi published
a detailed report on the Indian Electrical Industry, sponsored by Department of
Industrial Policy and Promotion, Ministry of Commerce and Industry,
Government of India (2009).126 The report mentions that the tremendous growth seen
in the light electrical industry popularly known as consumer durables industry of India
since liberalization. It also states that the industry has tremendous growth potential in
126
Economic_Services_Group_National_Productivity_Council. Productivity and Competitiveness of
Light Electrical Industry in India. Ministry of Commerce and Industry, Economic Services Group,
National Productivity Council, Department of Industrial Policy and Promotion. New Delhi: Government
of India. 2009.

46
India. The Industry sales were US$ 4.5 billion in value, in 2006-07 and more than 7
million units in volume terms.

Fig 3.3:- Growth of Consumer Electrical Appliance Production in India

The report states that this sector is characterized by intense competition, emergence of
new companies, introduction of MNCs, price discounts and exchange schemes. MNCs
continue to dominate the Indian consumer durable segment and hold an edge over their
Indian counterparts.

There is an increasing demand for electrical appliance. The reason behind the increase is
rising income levels, double-income families, changing lifestyles (Products like air
conditioners are no longer perceived as luxury products), availability of finance on
credit, etc.

The report mentions that The Consumer Electronics and Appliances Manufacturers
Association (CEAMA) estimate the size of the industry at Rs 30,000 crore and growing
rapidly.

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Table 3.1:- Growth Rate and Growth Drivers of Selected Household Electrical
Appliance

Source: A report published by Economic Services Group National Productivity Council on

Productivity and Competitiveness of Light Electrical Industry in India by Ministry of
Commerce and Industry, Economic Services Group, National Productivity Council, Department
of Industrial Policy and Promotion. New Delhi: Government of India. (2009)

48
(Naukri Hub)127 in a report published on the analysis of the industry, mentioned that
considering the Purchasing Power Parity (PPP), India is the 4th largest economy in the
world and is expected to overtake Japan in the near future to become the 3rd largest.
India has the youngest population amongst the major countries. Around two- thirds of
its population is below the age of 35, and nearly 50 % is below 25. There are 56 million
people belonging to the middle class, who are earning US$ 4,400- US$ 21,800 a year
and there are about 6 million rich households in India.

LG Electronics India Ltd. has invested around $250 million in India in 2011 by
establishing a manufacturing facility in Pune. Indian companies like Videocon
Industries and Onida are also planning an expansion. Videocon has acquired Electrolux
brand in India. With the acquisition of Thomson Displays by Videocon in Poland,
China, and Mexico, the company is marking its international presence. The report gives
credit to the country‟s fiscal policy that reduced the import duty on the household
electrical products and benefited the MNC‟s that imported their premium end products
from their manufacturing facilities that are located outside Inida.

The Naukri Hub report also says that the Indian consumers are replacing their existing
appliances with double door frost-free refrigerators, split air conditioners, fully
automatic washing machines, and flat screen LCD and LED colour televisions, which
are boosting the sales in these categories.

Companies like Samsung Electronics Co. Ltd. and LG Electronics India Ltd. are
introducing gift schemes and easy finance so as to capture the consumer base in rural
areas. The rural markets are growing at a faster rate that the urban markets (urban
market is growing at the annual rates of 7%-10% and the rural market is growing at the
annual rate of 25%). The rural population accounts for about 70% of the total Indian
population but has a very low penetration level for these products. The report states that
the rural areas have the penetration level of only 2% for refrigerators and 0.5% for
washing machines.

127
Naukri_Hub. Consumer Durables Industry. 22 December 2013 http://www.naukrihub.com
india/consumer-durables/.

49
2006 registered about 25% growth in the air conditioners. Refrigerator sales amounted
to 4.2 millions in 2006, whereas the production of the refrigerators went up by 17% as
compared to the preceding year (as many urban families replaced their old refrigerators
with frost free double door refrigerators). Washing machines also showed a reasonable
growth as more and more Indians bought electrical appliances due to change in
electricity scenario. The penetration of colour televisions has increased 3 times in 2007.
This growth rate is expected to continue in the coming years as well.

Some of the key players of the sector in India are

a. Samsung
b. Philips
c. LG
d. Sony
e. Whirlpool
f. Blue star
g. Onida
h. Voltas
i. Videocon
j. Panasonic
k. Hitachi
l. Toshiba
m. Etc.

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3.2 Televisions

Fig 3.4:- Major Player / Manufactures in India based on Market Share –Television

Source: http://www.cci.in/pdfs/surveys-reports/Consumer-Durables-Industry-in-India.pdf

The Fig 3.5 shows that Sony was the leader in producing Television with a market share
of 22% closely followed by LG and Samsung with 21% market share each followed by
Videocon with 14 % in market share in 2013.

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3.3 Air conditioners
Following are some companies producing the Air conditioners and their popular brands.

Table 3.2:- Companies producing Air conditioners

Source: A report published by Economic Services Group National Productivity Council on

Productivity and Competitiveness of Light Electrical Industry in India by Ministry of
Commerce and Industry, Economic Services Group, National Productivity Council, Department
of Industrial Policy and Promotion. New Delhi: Government of India. (2009)

Table 3.3:- Major Players/Manufacturers in India based on Market Share –Air

conditioner

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The Table 3.3 shows that Blue Star was the leader in producing Air conditioners with a
market share of 17.98 % followed by Voltas with market share of 14.11 %, LG (13.2%)
and Samsung (6.88%) amounting for a total market share of 52.17 % in 2008.

Following table shows the foreign trade and the domestic consumption comparison of
Air-conditioners for the years from 2002 to 2008.

Table 3.4:- Foreign Trade and Domestic Consumption of Air conditioners in India

Source: A report published by Economic Services Group National Productivity Council on

Productivity and Competitiveness of Light Electrical Industry in India by Ministry of
Commerce and Industry, Economic Services Group, National Productivity Council, Department
of Industrial Policy and Promotion. New Delhi: Government of India. (2009)

The above table shows consistent growth in the exports, imports trade ratios, domestic
consumptions and domestic sales of air conditioners since 2002 to 2008. This shows
that the trend will continue in the coming decade as well.

53
3.4 Refrigerators
Following are some companies producing Refrigerators and their popular brands.

Table 3.5:- Companies producing Refrigerators

Source: A report published by Economic Services Group National Productivity Council on

Productivity and Competitiveness of Light Electrical Industry in India by Ministry of
Commerce and Industry, Economic Services Group, National Productivity Council, Department
of Industrial Policy and Promotion. New Delhi: Government of India. (2009)

Fig 3.6:- Major Players/Manufacturers in India based on Market Share –

Refrigerator

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Table 3.6 shows that Whirlpool was the leader in producing Refrigerators with a market
share of 28.48 % followed by LG with market share of 27.14 % and Samsung (22.46%)
amounting for a total market share of 78.08% in 2008.

Following table shows the foreign trade and the domestic consumption comparison of
Refrigerators for the years from 2002 to 2008.

Table 3.7:- Foreign Trade and Domestic Consumption of Refrigerator in India

Source: A report published by Economic Services Group National Productivity Council on

Productivity and Competitiveness of Light Electrical Industry in India by Ministry of
Commerce and Industry, Economic Services Group, National Productivity Council, Department
of Industrial Policy and Promotion. New Delhi: Government of India. (2009)

The above table shows consistent growth in the exports, imports trade ratios, domestic
consumptions and domestic sales of refrigerators since 2002 to 2008. This shows that
the trend will continue in the coming decade as well.

55
 3.5 Washing Machines

Following are some companies producing Washing Machines and their popular brands.

Table 3.8:- Companies producing Washing Machine

Source: A report published by Economic Services Group National Productivity Council on

Productivity and Competitiveness of Light Electrical Industry in India by Ministry of
Commerce and Industry, Economic Services Group, National Productivity Council, Department
of Industrial Policy and Promotion. New Delhi: Government of India. (2009)

Table 3.9:- Major Players/Manufacturers in India based on Market Share –Washing

Machine

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Table 3.9 shows that Whirlpool was the leader in producing washing machine with a
market share of 28.48 % followed by LG with market share of 27.14 % and Samsung
(22.46%) amounting for a total market share of 78.08% in 2008.

Following table shows the foreign trade and the domestic consumption comparison of
Washing Machine for the years from 2002 to 2008.

Table 3.10:- Foreign Trade and Domestic Consumption of Washing Machines in

India

Source: A report published by Economic Services Group National Productivity Council on

Productivity and Competitiveness of Light Electrical Industry in India by Ministry of
Commerce and Industry, Economic Services Group, National Productivity Council, Department
of Industrial Policy and Promotion. New Delhi: Government of India. (2009)

The above table shows consistent growth in the exports, imports trade ratios, domestic
consumptions and domestic sales of washing machines since 2002 to 2008. This shows
that the trend will continue in the coming decade as well.

57
KPMG Advisory Services Private and Indian Brand Equity Foundation (IBEF)
(2007)128 published a report that gave a projection of the selected household electrical
appliance growth rates. A report by Corporate Catalyst India (2013)129 has project the
house hold electrical appliance to grow to a value of US$21.7bn by 2015. Fig 3.5 shows
the investments by the major players over years 2012 to 2015.

Table 3.11:- Projected Growth Rate of Household Appliance Industry

Source: http://www.cci.in/pdfs/surveys-reports/Consumer-Durables-Industry-in-India.pdf

Fig 3.5:- Investments by the Major Players over years 2012 to 2015

Source: http://www.cci.in/pdfs/surveys-reports/Consumer-Durables-Industry-in-India.pdf

128
KPMG_Advisory_Services_Private. Consumer Durables. Indian Brand Equity Foundation(IBEF).
2007.
129
Consumer-Durables-Industry-in-India.pdf. 2013. 23 December 2013 . http://www.cci.in/pdfs/surveys-
reports/Consumer-Durables-Industry-in-India.pdf.

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