Business - India;Cracker of a Diwali for Companies

Sapna Agarwal

Durables firms record 50% sales growth.

With consumer durables companies clocking up to 50 per cent growth in sales this Diwali over the year-ago period, they are now optimistic about meeting their revenue forecasts for the year despite low consumer sentiments. While the numbers are hard to come by, the results of this festive season have been better for most companies. This is because of more brand visibility (most firms had increased their advertising and branding spends this year) and a larger product portfolio.

Leading the pack are Sony and LG, which have recorded sales growth of 50 per cent for September and October compared with the year-ago period. Whirlpool's revenues increased by 23 per cent over the corresponding quarter last year, and even Philips maintained that it had met its sales targets.

Samsung India Deputy Managing Director R Zutshi said, "Our revenues for the festive season grew at 35 per cent over the corresponding period last year. We expect to close the financial year (January to December) with a growth of 30 per cent over the previous year, in line with our estimated growth forecasts."

Godrej Consumer Appliances clocked a 40 per cent increase in sales growth in the past two months. Optimistic of meeting the revenue forecasts for the year, Vice-President (Sales & Marketing) Kamal Nandi said, "We expect to end the year on a good note as we have our Christmas/New Year's sales. Then with the onset of summer in the south in February-March, we expect our fourth quarter sales to be on track as well. Our growth forecast was 40 per cent for the financial year."

At Sony India, sales saw an increase of 50 per cent over the corresponding period last year. Sunil Nayyar, general manager, sales, Sony India said, "We witnessed a growth of 50 per cent vis-à-vis last year for the period of September to October 2008 on a pan-India basis." For Whirlpool, it was small categories like microwave and new businesses such as water purifiers that have done exceedingly well, other than the traditionally strong categories of refrigerators and washing machines, said Shantanu Das Gupta, VP (Marketing), Whirlpool India.

Agreeing, Vivek Sharma, chief marketing officer, Indian sub-continent, Philips, said, "The lighting and the kitchen appliances segments did really well." This was not the case earlier this year when rising input costs and lack of incentives in the Union Budget had compelled durables manufacturers such as Samsung, LG and Onida to effect two rounds of hikes. These firms recently rued that the depreciating rupee and global financial crisis were adding to their woes and said they might be forced to raise prices again after Diwali. While Samsung is currently evaluating its options for another round of price hikes, companies like Godrej are now saying that they do not plan to effect a hike.

Another reason for the good performance could be attributed to the aggressive advertising and branding spends despite low market sentiments during the festive season by the companies. For instance, Sony spent 30 per cent, or Rs 60 crore, of its entire year’s A&B budgets during the festive season.

Similarly, Godrej has earmarked 40 per cent of its entire years A&B spend for the last four months of the calendar year from September to December. Philips had run three television campaigns, plus two national press campaigns and a radio campaign this festive season. Cyril Mani, head, marketing communication, Sony noted, "Our aggressive communication strategy along with competitive pricing resulted in increased footfalls in our stores."