disadvantages of consumer durable industry in India
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Answer:The two percentage point increase in excise duty across the board may put the big-ticket home appliance makers in trouble. Small-appliance makers may however survive it.
Air-conditioners, refrigerators and washing machines have been witnessing a lacklustre demand; the Decemeber-2011 quarter sales numbers of players such as Whirlpool, Voltas and Hitachi Home Appliances, stand a testimony here. An increase in end-product prices at this juncture may only dampen consumer sentiments further and hit sales for these companies.
Economy
EconomySome benefits and negatives for consumer durables
EconomySome benefits and negatives for consumer durablesRajalakshmi Sivam Updated on November 14, 2017
EconomySome benefits and negatives for consumer durablesRajalakshmi Sivam Updated on November 14, 2017
consumer
consumer
The two percentage point increase in excise duty across the board may put the big-ticket home appliance makers in trouble. Small-appliance makers may however survive it.
Air-conditioners, refrigerators and washing machines have been witnessing a lacklustre demand; the Decemeber-2011 quarter sales numbers of players such as Whirlpool, Voltas and Hitachi Home Appliances, stand a testimony here. An increase in end-product prices at this juncture may only dampen consumer sentiments further and hit sales for these companies.
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Operating profit margins for Whirlpool India was at 6.34 per cent in the Decmber-2011 quarter, down from 9 per cent in FY11. Air-conditioner makers have also seen a drop of over three percentage points in operating profit margins to four per cent in the recent quarter, driven by higher price of imported components and raw materials. Given the poor demand, these companies may not be in a position to pass on the hike in excise duty. But absorbing the increased excise burden would exert more pressure on their profit margins.
The Budget, however, has given complete exemption from customs duty on LCD and LED television panels. The increase in excise duty may however offset the benefit on the import front to some extent for panel television makers. Benefit if any is likely to be passed on to the consumers.