Companies & Sectors
Consumer durables sector bets on festive season, but prospects don’t seem bright

Market watchers feel that discounts & freebies might not help the consumer durables sector, and inflation plus rising interest rates may spoil the party and impact sales

After bidding farewell to the Ganapati festival, the market seems to be optimistic over the Navratri-Diwali season. Among others, the consumer durables sector is pinning its hopes on the expected festive shopping spree to shore up its sales. However, a section of experts are sceptical about the situation.

"Sales have already been hit, and though they may pick up during the season, ambitions must be kept in check," an executive of a retail chain told Moneylife, preferring anonymity. He said that while manufacturers are aiming high, it is unlikely that such high targets can be achieved.

According to a recent report by Nomura, consumer sentiment is turning negative, as seen in the decline in growth rate of consumer durables loans deployed by banks. The reason behind the decline is inflation and growing interest rates-and the downturn is likely to continue until inflation comes down.

To lure customers, stores and companies are giving special offers and discounts. "We are looking at free gifts and after-sales services, because the traditional lucky draw and scratch card methods do not appeal to our customers, who want value for money," said Anish Malhotra, manager of a showroom in Vashi, Navi Mumbai.

However, he also pointed out that the past few months have seen fewer sales, and so he is maintaining modest targets. He said that there were many washing machines, microwaves, mixers and other appliances which have been lying on the shelf for many days. "The only things we know will sell-no matter what-are cell phones. Other household appliances and electronics saw robust sales last year, but this year may not be so good," he said.

However, the Consumer Electronics and Appliances Manufacturers Association (CEAMA) is optimistic that come Diwali, sales will pick up. A representative said, "Diwali is traditionally a time when a lot of purchases are made. We expect that people will spend their Diwali bonuses on electronics like camcorders, computers, cameras and audio systems."

Companies like Sony, Samsung and LG are promoting their televisions aggressively, especially the LED and 3-D screens. Sony is looking at earning Rs2,000 crore from the September-November period. "For the festive period alone, we expect to generate a 30%-35% jump in sales over the same period last year. We are promoting Bravia very strongly and investing heavily in advertisements," said Sunil Nayyar, senior general manager, sales, Sony India, in a media statement.

But like Ajit Joshi, chief executive of Infiniti Retail says, the situation is "challenging." An analyst added, "Sales of electronics like televisions or refrigerators may not be so high, because the customer is feeling the pinch. Gold & jewellery, in such a situation, will look like a more viable investment."


Titan Industries plans to enter new business segments

Titan Industries plans to enter footwear, writing instruments and fragrances

Tata Group firm Titan Industries is mulling entry into new categories such as footwear, writing instruments and fragrances as it looks to tap luxury segment and expects to touch a turnover of $3 billion by 2014-15.

The company that sells watches, jewellery and eye-wear under brands such as Titan, Xylys, Sonata, Tanishq and Fastrack is aiming to become a total lifestyle company.

"We plan to add a new category every two or three years and are continuously exploring new categories like footwear, writing instruments, fragrances, leather, etc. Luxury could be our next big step," Titan Industries managing director Bhaskar Bhat said in an interview to the group's in house magazine--Tata Review.

The conscious idea is to expand at retail and become a lifestyle company, he said.

For the year ended 31 March 2011, Titan Industries revenue was Rs6,521.64 crore, as per records with the BSE.

Commenting on the company's growth plans Bhat said: "Our first target is to reach $3 billion (over Rs14,200 crore), which is going to happen in 2014-15. More important is to take advantage of the continuing prosperity of India, and become very strong in our three categories and create a strong relationship with our 120 million customers".

"We want to be India's most admired lifestyle company and eventually, a globally admired lifestyle company," he said.

The company's jewellery business under 'Tanishq' brand is expected to be Rs10,000 crore by 2014-15.

"The outlook for Tanishq is continuous growth; we want to touch Rs100 billion by 2014-15, three times the size of last year's turnover," Bhat said.
In jewellery, the agenda is to take the share from the current 4.5-5% up to 10%, which is being done by establishing large format stores, and increasing the diamond jewellery percentage, he added.

From the watches division, the company is eyeing Rs3,500 crore by 2014-15, driven by new designs and network expansion and expects its eye-wear division to break even by 2012-13, according to the report filed by brokerage firm Prabhudas Lilladher after meeting Bhaskar Bhat.

On Thursday, Titan ended 2.89% up at Rs218.60 on the Bombay Stock Exchange, while the benchmark Sensex gained 1% to 16,876.54.


Opto Circuits to raise Rs1000 crore through IPO

Opto Eurocor Healthcare proposes to raise up to Rs1,000 crore through the IPO

Medical equipment maker Opto Circuits (India) said its wholly-owned subsidiary Opto Eurocor Healthcare would raise about Rs1,000 crore through initial public offering (IPO).

Opto Eurocor Healthcare proposes to raise up to Rs1,000 crore through the IPO, Opto Circuits (India) said in a filing to the Bombay Stock Exchange (BSE).

Through the IPO, promoters will dilute about 25% stake, Opto Circuits director finance V Bhaskar said. However, he declined to give a timeline for the public offer saying it would depend on market conditions.

Bhaskar said the proceeds of the IPO would be mainly utilised by the company to set up manufacturing facilities, two in India and one in Malaysia. A portion of the fund would also be used for adding capacities at existing plants and new product developments but did not provide a detailed break-up.
Opto Eurocor Healthcare makes medical stents used in various cardiovascular surgeries.

On Thursday, Opto Circuits ended 0.62% down at Rs238.80 on the Bombay Stock Exchange, while the benchmark Sensex gained 1% to 16,876.54.


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