1

Industry Analysis Project Report

On

FMCD Sector

Submitted By:
Shashwat Chhetry
Prateek Chaudhary
Suganya Dhanasekaran
M.B.A. + P.G.P.M. Students of 2014 - 2016 Batch
Of
Mysore University
Submitted To:

IBMR International Business School (IBMR - IBS)

No. 1,2nd Cross, K.R. Garden, 80 Feet Road,
Opp. NDDB/ Near Passport Office,
Kormangala, Bangalore - 560 095, India
www.ibmrbangalore.com
Semester 1(2014 - 2016)

September 2014

TABLE OF CONTENTS
CHAPTER-1: INDUSTRY PROFILE

1-19

FMCD SECTOR

Factors influencing FMCD Sector

Size of FMCD in India and Globally and the contributions to GDP of Indian Economy
Top 10 Indian and Global FMCD companies

CHAPTER-2: COMPANY PROFILE

19-27

History of the company, Founder and the current Board of Directors , Size of the
company operations
DISCUSSED COMPANIES
Voltas
Kelvinator
Samsung
Whirlpool
Godrej
Bajaj
Nokia

CHAPTER-3: SWOT Analysis (Strengths, Weaknesses,

Opportunities, Threats)
28-36
Business Analysis

Competitors Analysis

SWOT Analysis

CHAPTER-4: PRODUCTS & SERVICES

36-39

Major products/services

Top performing products details

CHAPTER-5:

40-45

Job opportunities for MBA graduates in the FMCD sector and

Salaries provided to the MBA fresher in the FMCD sector.

CHAPTER-6
Summary and Conclusion

45-47

CHAPTER 1
INDUSTRY PROFILE
FMCD SECTOR
FMCD stands for Fast Moving Consumer Durables. In economics terms, hard goods or
durable goods are those that do not wear out instantly over a period of time. These goods last
long and can be used for the future. The best example of perfect durable goods is a brick that
theoretically doesnt wear out. The goods like refrigerators, cars, mobile phones and several
other electronic gadgets come under High Durables, as they can be easily used over a period
of three or more years. Durable goods are typically characterised by long periods between
successive purchases. The best examples of FMCD are all household appliances like
refrigerators, televisions, washing machines, sports equipments etc.
Within the past 68 years post independence, there has been a major change in the economy of
India. India has seen manifold increase in the income of its people. Due to this, there has been
a change in the outlook of the people towards purchasing any material. Today the customer
demands for high end, technologically enhanced products and the demand is stimulated by the
rising earning members and technological awareness among the common public. This shift is
also because of the large scale production of branded products and the narrowing down the
prices between the branded and the non branded products. The competition is so high in the
consumer durables markets that every company is providing new avenues for the customers to
invest their money. They provide all technical assistance, free offers and other extra services.
Due to this, the FMCD sector seems to be in what we call as BOOM in the current day
scenario. The giants in the FMCD sector in India include companies like Godrej, Whirlpool,
Samsung, Micromax, Voltas etc.

In todays India the market has become so huge that

commodities like air-conditioners, refrigerators, mobile phones etc have become the need of
the consumers rather than a want. Furthermore, westernisation has also changed the outlook of
the Indian market.

FACTORS INFLUENCING THE FMCD SECTOR

The following are the main factors that influence the FMCD sector.
1.

Rise in disposable income: - With the increase of the working class and dual income
families and the rise in the disposable income, the demand for the electrical goods has
been rising at a stupendous rate. The growing Middle Class has become a big target
customer for the FMCD companies who are there in the market to woo them. A very
recent example can be cited. The sale of Xiaomi Mi3 on Flipkart within 2.4 seconds, we
can imagine the customer base on FMCD. This has been a fashion or a custom we may
call it; the ventures of FMCD and E-commerce to woo the customers and increase the
demands.

2. Product pricing: - Today the customers being highly knowledgeable technologically,

the market scenario of FMCD is furiously competitive. The product pricing plays a very
important role in attracting the customers and making a difference. Today, the working
class is always after cheap and best products. Every penny added or subtracted from a
product counts. Of course for the higher range customers, the brand name makes more
of a difference but as a wise customer if same facilities and same features are provided
at a cheaper rate anyone would buy it. Nowadays, the brands have even come up with
instalment payments to meet the needs of the customers. All these schemes attract the
customers more and more and thus affect the sector directly.
3. Availability of newer variants of a product: - In the FMCD sector, the customers are
spoiled for choices. For a single product, there are many variants. Today, a customer can
choose to buy a single product from at least three to four companies. For instance, a
customer needs to buy a refrigerator, there are companies like LG, Samsung,
Kelvinator, Whirlpool etc. So there are so many choices that every company has to
come up with some new and innovative to woo the customers. In order to survive the
competition, every company in this sector has to provide quality, style and uniqueness
to win the hearts of the customers.

4. Innovative advertising and brand promotion: - By the extensive use of the internet
the customers are already aware of the products and their specifications. The companies
have to be very innovative with their advertisements and offers. The target customers
must be reached very effectively. The brand positioning must be carefully done. Sales
and promotion measures like discounts, offers, schemes, exchange offers etc make a
company distinguish itself from others.
5. Rise in the share of organized retail: Rise in organized retail will set the growth pace

of the Indian consumer durables industry. According to a working paper released by the
Indian Council for Research on International Economic Relations (ICRIER), organized
retail which constituted a mere 16% of the retail sector in FY12-13 is likely to grow at
45-50% per annum and double its share in the total retail pie 32% by 2014-15. The
share will grow with bigger players entering the market.
6. Festive season sales:- During the festive seasons, the demands for consumer durables
touch the sky. According to our market survey the demand of LCD and LED televisions
quadruple. Similar case with the smart phones. These commodities come up with festive
offers too to attract the customers.
SUCCESS IN THE INDUSTRY WOULD DEPEND ON ADDRESSING KEY FACTORS
Market positioning and branding
Addressing key customer requirements

Product technology
Providing technologies that benefit the

that act as demand drivers by proactive customer through low power

marketing

and

establishing

strong consumption, low service requirement,

brand association
Distribution and service network
From saturated urban regions to low-

low cost of operation, etc.

Attractive locations
With raw materials forming

penetration rural areas and tier-II/III

significant chunk of costs, production

towns, distribution networks and brand facilities located near ports to import
recognition will continue to play

cheaper raw materials could provide an

significant roles

advantage

Size of FMCD in India and the World

FMCD IN INDIA, growth in the coming years and its effect on the
Economy
India is expected to reach US $ 12.5 billion by the financial year 2015 from US $ 7.5 billion in
FY 12 which would make India the fifth largest consumer durable market in the world. In the
consumer durables market in India, the urban market holds 65% share. The demand in the
urban markets is increasing due to the demand for products like LED TV, air conditioners,
laptops, wellness products etc. As the Government of India is planning to invest heavily on
electrification in the rural market, the consumer durable market in the Rural India is also likely
to increase in manifolds soon.
Due to the 100% FDI allowed in the electronics and hardware manufacturing sector, the
growth has been stupendous over the years, with a compounded annual growth rate (CAGR)
of 10.8% over FY03-12.

This sector is likely to have a CAGR of 10% in the FY 14-15 as the demand from rural and

semi urban areas is expected to increase.

The Indian consumer durables market comprises of the following segments.

White goods
Brown goods
Consumer Electronics

White Goods
Air conditioners
Refrigerators
Washing machines
Watches and clocks
Cleaning equipments
Sewing machines

Brown Goods
Microwave ovens

Consumer Electronics
Televisions and audio

Cooking range
Chimneys
Mixers and Grinders
Electronic Fans
Irons

systems
Electronic accessories
Computers and Laptops
Mobile phones
Camcorders
Projectors

The brown goods and the consumer electronics are the most penetrative markets; mobile
phones and the electric fans being the most widely used products both in the urban and the
rural markets.
Appliances
FY 04
FY 09
FY 14
Colour Televisions
68
110
185
Air conditioners
23
47
95
Refrigerators
31
51
81
Washing Machines
11
21
36
Total
133
229
397
Five Years CAGR
--11.5%
12%
The table shows the Household Appliances Industry (in Billion)

Furthermore, Indias domestic video, audio and gaming device market is also expected to
grow in the FY 15 to the value of US $ 21.7 billion.

Market Share of various segments

Flat Panel Television

Others; 13%
Samsung; 21%
Panasonic; 9%

Videocon; 14%

LG; 21%

Sony; 22%

Refrigerators

Others; 3%
Videocon; 16%

LG; 23%

Godrej; 18%
Whirlpool; 20%
Samsung; 20%

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Air Conditioners

Others; 23%

LG; 28%

Hitachi; 8%
Voltas; 19% Samsung; 21%

Microwave Ovens

Others; 17%
LG; 29%
Godrej; 11%

Whirlpool; 15%
Samsung; 27%

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Smartphones

Others; 23%

Samsung; 32%

Apple; 4%
Karbon; 6%
Micromax; 9%
Nokia; 27%

The key companies in the Indian FMCD market include the following giants.

Samsung
LG
Videocon
Whirlpool
Godrej
Sony
Panasonic

Some of these companies will be discussed in the second chapter.

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Industry Size, Growth, Trends

The consumer durables market in India was estimated to be around US$ 4.5 billion in 200607. More than 7 million units of consumer durable appliances have been sold in the year 200607 with colour televisions (CTV) forming the bulk of the sales with 30 per cent share of
volumes. CTV, refrigerators and Air-conditioners together constitute more than 60 per cent of
the sales in terms of the number of units sold.
Key Consumer Durables - Share by Volume

Colour Television
sets (CTVs)

30%

Refrigerators

18%

Air-conditioners

13%

Washing Machines

5%

Others

34%

Source: Cygnus Quarterly Report, Aug 2007, Edelweiss Report on Industrial Production
In the refrigerators market, the frost-free category has grown by 8.3 per cent while direct cool
segment has grown by 9 per cent. Companies like LG, Whirlpool and Samsung have
registered double-digit growth in the direct cool refrigerator market.
In the case of washing machines, the semi-automatic category with a higher base and fully-

13

automatic categories have grown by 4 per cent to 526,000 units and by 8 per cent to 229,000
units, respectively.
In the air-conditioners segment, the sales of window ACs have grown by 32 per cent and that
of split ACs by 97 per cent.
Since the penetration in the urban areas for these products is already quite high for both
CTVs and refrigerators are shifting to the semi-urban and rural areas.

The growth across product categories in different segments is assessed in the following
sections.

Consumer Electronics
The CTV production was 15.10 million units in 2006-07 and is expected to grow by at least 25
per cent. At the disaggregated level, conventional CTV volumes have been falling while flat
TVs have grown strongly. Market sources indicate that most CTV majors have phased out
conventional TVs and have been instead focusing more on flat TVs. The flat segment of CTVs
now accounts for over 60 per cent of the total domestic TV production and is likely to be
around 65 per cent in 2007-08.
High-end products such as liquid crystal display (LCD) and plasma display CTV grew by
400 per cent and 150 per cent respectively in 200607 following a sharp decline in prices of
these products and this trend is expected to continue.
The audio/video player market has seen significant growth rates in the domestic market as
prices have dropped. This trend is expected to continue through 2007-08, as competition is
likely to intensify to scale and capture the mass market.

Mobile Phones The New Opportunity

Mobile phone production in India is expected to grow at a Compound Annual Growth Rate
(CAGR) of 28.3 per cent from 31 million units in 2006 to 107 million units in 2011.

14

Production of mobile phones is expected to be a US$ 13.6 billion industry by 2011. The
current US$ 4.9 billion industry revenue is growing at a CAGR of 26.6 per cent. The growth
of mobile telephony market is highest in India with 6 to 7 million subscribers being added on
a monthly basis compared to the US, which adds 2 million subscribers and China, which adds
about 5 million subscribers.
India is also emerging as a global base for handsets as key global players. India produced
nearly 31 million mobile phones in 2006 worth about US$ 5 billion. This segment made the
largest contribution to overall electronics production revenue and the total available market for
semiconductors. For 2007, it is projected that the handset production will increase by 68 per
cent in volume to about 51 million units and 65 per cent in value terms. Starting on an already
strong base, over six million users are being added every month and are building a large local
market for mobile manufacturers
Low mobile penetration and favourable government policies are driving global mobile phone
manufacturers to set up manufacturing facilities in India. Nokia started its manufacturing unit
in Chennai in January 2006 and produced about 25 million handsets in the first year of its
operation. India has now become the second largest market for Nokia phones in the world.
Nokia is also exporting mobiles from its Indian facilities to Sri Lanka. Motorola and
Electronics Manufacturing Service vendors (EMS) like Foxconn and Flextronics have also set
up plants in India.
According to a study by Gartner, though the worlds top five handset makers will retain a
major share of production volume, local manufacturers can be expected to capture up to a fifth
of Indias overall mobile phone production volume by the end of 2011. Growing demand for
low-cost mobile phones and the need for EMS vendors to reduce their revenue exposure to
Nokia, Motorola and Sony Ericsson, for whom they are now manufacturing in India, are the
key factors expected to contribute to this trend. Most of the components are imported today.
Development of local component manufacturing industry will be essential for continuous
growth of total handset manufacturing. Given the price-sensitivity of the Indian consumer,
accesses to low-cost, feature-rich and local-specific chip designs, as well as a strong
distribution network, remain key considerations in this market. Key stakeholders in the mobile
phone industry value chain provide these, and local manufacturers could be expected to look

15

to form alliances and partnerships.

White Goods
Increased consumer demand is expected to boost the white goods segment to achieve
production levels of US$ 5.09 billion by the end of 2007-08 against US$ 4.54 billion in 200607, with a growth rate of 12.5 per cent.

Air-Conditioners
Growth in the white goods segment was largely driven by the Air-conditioner (AC) segment.
Within this, split ACs have been the main growth drivers, recording a growth of over 90 per
cent in 2006. Growth, albeit at a slower rate of 32 per cent, has also been experienced in the
segment of window ACs. The window AC segment is slightly less organised as compared to
split AC segment. The market for air-conditioners is divided quite uniformly across customer
segments, with about 45 per cent share for private sector corporates, 20 per cent for domestic
use, 15 per cent each for public sector companies and government use and 5 per cent for
hospitals.
Washing Machines
The sale of washing machines has grown from about 780,000 units to 1,948,000 units during
the period, fiscal year 1999 to 2007, registering a near 12.2 percent annual growth rate. The
washing machine market may be segmented into semi-automatic and fully automatic
machines. Semi-automatic washing machines enjoy a dominant share of 85 per cent. Fully
automatic washing machines have been gaining share as a consequence of product
improvement, competitive pricing and resultant convenience. However, semi-automatic
machines will continue to play a major role in the Indian market for quite sometime. Fully
automatic washing machines have been the growing at 44.5 per cent and semi-automatic
segment, at about 18 per cent.
The entry of MNCs has widened the range to more than 10 brands with a proliferation of
models, while ensuring technology up gradation. A visible impact of this churn has been the
exit of a few established players from the market.
Refrigerators

16

Refrigerators are one of the most sought after appliances in Indian middle class homes. The
refrigerator market has two segments: Direct Cool and the relatively new Frost-Free type. The
market for refrigerators in 2006-07 was about 6.5 million units. The growth of refrigerator
segment is projected to be between 18 to 22 per cent over the next 5 years.
A critical success factor for the refrigerator market, given its widespread use, is deeper
reach into the market and increased penetration. Recently, the market is getting reinforced by
the replacement segment as well.
Vacuum Cleaners
Vacuum Cleaners are an emerging segment in the Indian market, still at a nascent stage. The
drivers for demand have been the improvement in life style and higher aspirations of urban
middle class and the top income brackets. While the market has been growing, this segment is
not expected to reach significant volumes soon.
Part of this could be attributed to the lifestyle compatibility of Indian customers with the
product. In the large majority of Indian houses, for instance, floors are not carpeted and the
product will have to meet dual requirements of sweeping and mopping. Another impediment
to the adoption of vacuum cleaners has been the availability of cheap domestic help in most
cities.
Domestic Electrical Appliances
Brown goods or domestic kitchen appliances are indicators of the changing consumer scenario
in post-liberalisation economic environment. The major products constituting the brown goods
market are mixers, grinders, irons, microwave-ovens, rice cookers, water heaters or geysers,
electric fans and exhausts.
The branded brown goods market has expanded at a significant pace and is expected to
retain the momentum into the future as well. The market has been transformed by the entry of
over a dozen new brands, moreover competition has intensified. While focus on price
competency remains a key priority, players have also started focusing on other product
features such as safety and total cost of ownership of the device.

17

Goods, like the rice cooker have been continuously growing in a slow and steady manner
over a significant period of time, while microwave ovens have grown exponentially after the
initial period of customisation to local requirements.
The electrical iron market can be divided into two segments: heavy and light-weight. The
market is also segmented into two sub-segments: steam and non-steam irons.
India being a tropical country, electric fans are an essential utility for more than six months
of the year in most parts of the country. The present market size is estimated at around 11.6
million pieces. The market is divided among ceiling, pedestal, wall and table fans. Industrial
and exhaust fans are another important segment. The major players include Orient Fan,
Crompton Greaves, Jay Engineering, Bajaj Electricals, Polar, Khaitan and Alsthom.
The electrical appliances industry, which had been focused on the urban market, is now
reaching out to semi-urban and rural markets as well, because of the shift in living style of the
population, increasing electrification of villages and relatively higher purchasing power of
consumers. As the market penetrates into the core middle class segment in both urban and
rural areas, it is expected to expand phenomenally, offering large volumes to the industry.

FMCD in the Global Market

Computer and peripherals
Worldwide PC shipments declined 8.3% y/y to 87.5 million units in
3Q12.Gartner
Global notebook shipments declined 4.5% q/q and 11.6% y/y to 48 million units in
3Q12.Digitimes Research
Global notebook shipments will slip 0.8% y/y to 194 million units in 2012 and then
increase 5.9% y/y to 205 million units in 2013.MIC
Ultra books shipments will reach 10.3 million units in 2012 with more
than half of shipments occurring in 2H12.IHS

18

Ultra-slim PC shipments will grow from 3.4 million in 2011 to 65.0 million by 2015.
NPD Display Search
Internet connected devices will reach 9.6 billion devices in 2012.IMS
Research
Smart connected device shipments increased 27.4% y/y and 2.8% q/q to
267.3 million units in 2Q12.IDC

Consumer Electronics
Global consumer electronics market revenues will expand 1.3% to US$361 billion in
2012.IHS iSuppli
Overall holiday spending is expected to increase 11% y/y in 2012, with spending on
consumer electronics is increasing to average of $252.CEA
Wearable technology devices shipments are expected to grow from 14
Million in 2011 to 92.5 million units by 2016.IMS Research

TOP TEN FMCD COMPANIES IN INDIA AND THE WORLD

TOP TEN TECH COMPANIES IN THE WORLD
1.
2.
3.
4.
5.
6.

Apple Inc , USA, US$ 156.5 billion

Samsung Electronics, South Korea US $149 billion
Hewlett Packard, USA, US $120.5 billion
Foxconn, Taiwan, US $ 117.51 billion
IBM, USA, US $ 106.5 billion
Panasonic, Japan, US $ 99.65 billion

19

7. Toshiba, Japan, US $ 74.39 billion

8. Microsoft, USA, US $ 73.72 billion
9. Sony, Japan, US $ 67.4 billion
10. Dell, USA, US $ 62.07 billion

TOP TEN FMCD COMPANIES IN INDIA

1. Samsung India, 37% Market Shares
2. LG India, 23% Market Shares
3. Toshiba India
4. Sony India, 21-22% Market Shares
5. Videocon India, 12% Market Shares
6. Panasonic India, 6% Market Shares
7. Mirc Electronics(ONIDA)
8. Hitachi India
9. Whirlpool India, 20 % Market Shares in refrigerators
10. Godrej, 11% Market shares in Microwave ovens

CHAPTER 2
COMPANY PROFILE
Following are the top companies of FMCD in the world-

Voltas
Type - Public Company
Industry Home Appliances Engineering
Founded- 1954
CEO- Mr. Sanjay Johri
Headquarters Voltas House, Mumbai, India

Products Heating, Air conditioning, Refrigeration, Ventilation

Revenue Rs. 53643.5 million (USD $890 million)

20

Operating Income- Rs. 4496.9 million (USD $75 million)

Net Income- Rs.3845.6 million (USD$64 million)
Website- www.voltas.com

Voltas Limited is an engineering, air conditioning and refrigeration company based in

Mumbai, India. It makes equipment for industries in areas such as heating, ventilation and air
conditioning, refrigeration, construction equipment, materials handling, water management,
building management systems, indoor air quality and chemicals.

The Company was incorporated on 6 September 1954 at Mumbai. The Company was
promoted in 1954 by M/s. Volkart Brothers andTatas
Voltas is a part of the Tata Group. The managing director is Mr. Sanjay Johri. Its shares are
traded on the Bombay Stock Exchangeunder symbol 500575 with a turnover of INR 53643.5
million in 2011-12.
Voltas provided the air-conditioning for the world's biggest ocean liner, the RMS Queen Mary
2 and also the world's tallest building, the Burj Khalifa
The Voltas company has large Service Network. Voltas has its own service center in each
major city.

21

Kelvinator
Type- Division of Electrolux
Industry- Appliances
Founded-1914
Products- Commercial refrigeration for food service
Kelvinator was founded in 1914, in Detroit, Michigan, United States by engineer Nathaniel B.
Wales who introduced his idea for a practical electric refrigeration unit for the home to
Edmund Copeland and Arnold Goss.
Wales, a young inventor, secured financial backing from Arnold Goss, then secretary of the
Buick Automobile company, to develop the first household mechanical refrigerators to be
marketed under the name "Electro-Automatic Refrigerating Company."After producing a
number of experimental models, Wales selected one for manufacturing.
In February 1916, the name of the company was changed to "Kelvinator Company" in honor
of British physicist, Lord Kelvin, the discoverer of absolute zero. Kelvinator was among some
two dozen home refrigerators introduced to the U.S. market in 1916. In 1918 Kelvinator
introduced the first refrigerator with any type of automatic control.
Frustrated by iceboxes, the Grand Rapids Refrigerator Company introduced a porcelain lined
"Leonard Cleanable" ice cabinet. Kelvinator began buying Leonard's boxes for its electric
refrigerated models. By 1923, the Kelvinator Company held 80 percent of the American
market for electric refrigerators.
On July 3, 1925, Kelvinator bought Nizer Corporation in a tri-party merger valued at
$20,000,000.

22

Samsung Electronics
Type Public
Industry- Consumer electronics, Telecoms equipment,Semi conductors, Home appliances
Founded- 1988
CEO BK Yoon
Headquarters- Suwon, Gyeonggi Province, South Korea
Products- LCD & LED Panels, Televisions, Mobile Phones
Revenue- 228.692 trillion (2013)
Operating Income- 36.785 trillion (2013)
Profit- 29.821 trillion (2013)
Total assets- 214.075 trillion (2013)
Total equity- 150.016 trillion (2013)
Employees- 326,000 (2014)
Website- www.samsung.com

Samsung Electronics Co. Ltd. is a South Korean multinational electronics company

headquartered in Suwon, South Korea. It is the flagship subsidiary of the Samsung Group,
amounting to 70% of the group's revenue in 2012, and has been the world's largest information
technology company by revenues since 2009.Samsung Electronics has assembly plants and
sales networks in 80 countries and employs around 370,000 people. For 2012 the CEO is
Kwon Oh-Hyun.

23

Samsung has long been a major manufacturer of electronic components such as lithium-ion
batteries, semiconductors, chips, flash memory and hard drive devices for clients such as
Apple, Sony, HTC and Nokia.
In recent years, the company has diversified into consumer electronics. It is the world's largest
manufacturer of mobile phones and smartphone fuelled by the popularity of its Samsung
Galaxy line of devices. The company is also a major vendor of tablet computers, particularly
its Android-powered Samsung Galaxy Tab collection, and is generally regarded as pioneering
the phablet market through the Samsung Galaxy Note family of devices.

Whirlpool Corporation
Type- Public
Industry- Household Appliances
Founded- 1911
Founders- Louis Upton, Emory Upton
Headquarters-Benton Charter Township, Michigan, US
Products-

Major and Small appliances

Revenue- US$ 18.769 billion (2013)

Operating income- US$ 1.249 billion (2013)
Profit-US$ 827 million (2013)
Total assets-US$ 15.544 billion (2013)
Total equity-US$ 4.924 billion (2013)
Employees-69,000 (2013)

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The Whirlpool Corporation is an American multinational manufacturer and marketer of home

appliances headquartered in Benton Charter Township, Michigan, United States, near Benton
Harbor, Michigan. The Fortune 500[4] company has annual revenue of approximately $19
billion, 69,000 employees, and more than 70 manufacturing and technology research centers
around the world. The company markets Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana,
Gladiator Garage Works, Ingles, Estate, Brastemp, Bauknecht and Consul. After acquiring the
Maytag Corporation on March 31, 2006, the Whirlpool Corporation surpassed Electrolux to
become "the largest home appliance maker in the world."
In the U.S., Whirlpool has 8 manufacturing facilities: Amana, Iowa; Tulsa, Oklahoma;
Cleveland, Tennessee; Ohio: Clyde, Findlay, Greenville, Marion (and Ottawa).

Godrej
Type-Public company
Industry-Conglomerate
Founded

-1897

Founder(s)- Ardeshir Godrej, Pirojsha Godrej

Headquarters- Mumbai, Maharashtra, India
Products- Real estate, FMCG, industrial engineering, home appliances, furniture, security,
Agri care
Revenue- 216 billion (US$3.6 billion)(2013)
Employees- 26,000 (2013)

The Godrej Group is an Indian conglomerate headquartered in Mumbai, Maharashtra, India,

managed and largely owned by the Godrej family. It was founded by Ardeshir Godrej and
Pirojsha Godrej in 1897, and operates in sectors as diverse as real estate, consumer products,
industrial engineering, appliances, furniture, security and agricultural products. Subsidiaries

25

and affiliated companies include Godrej Industries and its subsidiaries Godrej Consumer
Products, Godrej Agrovet, and Godrej Properties, as well as the private holding company
Godrej & Boyce.

Bajaj Electricals
Industry-

Electrical equipment

Founded

-14 July 1938

Founder(s) - Kamalnayan Bajaj

Headquarters -Mumbai, Maharashtra], India
Key people- Shekhar Bajaj, Chairman and MD, Mr Anant Bajaj, Joint Managing Director
Products-

Home Appliances, Fans, Lighting & Engineering and Products

Revenue

- 27.7 billion (US$460 million) (2011)

Parent -

Bajaj Group

Subsidiaries- Starlite Lighting

Bajaj Electricals Ltd (BEL) is an Indian consumer electrical equipments manufacturing

company based in Mumbai, Maharashtra] It is a part of the 380 billion (US$6.3 billion) Bajaj
Group. It has diversified with interests in lighting, luminaries, appliances, fans, LPG based
Generators, engineering and projects. Its main domains are lighting, consumer durables,
engineering and projects. Lighting includes lamps, tubes and luminaries. Consumer durables
include appliances and fans. Engineering and projects include transmission line towers,
telecommunications towers, high mast, poles and special projects, and others include die
casting, wind energy & solar energy. Some notable project includes lighting works at the
Commonwealth Games stadium and the Bandra Warli Sea Link

26

It has 19 branch offices spread in different parts of the country with a chain of about 1000
distributors, 4000 authorised dealers, over 400,000 retail outlets and over 282 Customer Care
centres.

Nokia
Type- Public company
Industry Telecommunications equipment
Internet- Computer software
Founded-

Tampere, Grand Duchy of Finland (1865)

incorporated in Nokia (1871)

Founder(s)

Headquarters-

Fredrik Idestam
Leo Mechelin
Espoo, Uusimaa, Finland

Area served-Worldwide
Key people

Risto Siilasmaa (Chairman)

Rajeev Suri (President and CEO)
Timo Ihamuotila (CFO)

Products

-List of Nokia products

Services

-Maps and navigation, music, messaging and media

Revenue

- 12.70 billion (2013)

Operating income- 519 million (2013)

Net income- -615 million (2013)

27

Total assets- 25.19 billion (2013)

Total equity- 6.46 billion (2013)

Employees -90,981 (2013)

Nokia is a Finnish communications and information technology multinational corporation that

is headquartered in Espoo, Uusimaa. The company provides Internet services, including
applications, games, music, media and messaging services, including free-of-charge digital
map information and navigation services delivered through its wholly owned subsidiary. Its
Nokia Networks subsidiary provides telecommunications network equipment and services.
As of 2013, Nokia employed 90,000 people across 120 countries, conducts sales in more than
150 countries and reported annual revenues of around 12.7 billion. Nokia is a public limitedliability company listed on the Helsinki Stock Exchange and New York Stock Exchange. It is
the world's 274th-largest company measured by 2013 revenues according to the Fortune
Global 500.
In September 2013, Nokia sold what was once the world's largest vendor of mobile phones to
Microsoft as part of an overall deal totaling 5.44 billion (US$7.17 billion). Stephen Elop,
Nokia's former CEO, and several other executives joined the new Microsoft Mobile subsidiary
of Microsoft as part of the deal, which closed on 25 April 2014.

28

CHAPTER 3
BUSINESS ANALYSIS
For the purpose of doing the market analysis the whole consumer durables market has been
divided into two parts i.e.; Consumer electronics and Household appliances.
Now analysis has taken into account the market value, market value forecast, market volume,
and market volume forecast.

CONSUMER ELECTRONICS
The consumer electronics market consists of the total revenues generated through the sale of
audio visual equipment and games console products designed primarily for domestic use. The
audio visual equipment includes CD Players, DVD Players / Recorders, hi-fi systems, home
theatre, in-car entertainment systems, portable digital audio, radios, televisions and video
recorders. Games consoles segment includes both home use and portable consoles. After
posting decelerating growth between 2004-2008, the Indian consumer electronics market is
expected to follow similar pattern in the forthcoming years up to 2013.
The Indian consumer electronics market generated total revenues of $4,196.6 million in 2008,
representing a compound annual growth rate (CAGR) of 9.5% for the period spanning 20042008. In comparison, the Chinese and Japanese markets grew with CAGRs of 13.4% and 6%
respectively, over the same period, to reach respective values of $26,077.9 million and
$22,492.5 million in 2008. Electricals and Electronics Retailers sales proved the most
lucrative for the Indian consumer electronics market in 2008, generating total revenues of
$3,821.7 million, equivalent to 91.1% of the market's overall value. In comparison, sales from
Discount, Variety Store, and General Merchandise Retailers generated revenues of $302
million in 2008, equating to 7.2% of the market's aggregate revenues. The performance of the
market is forecast to decelerate, with an anticipated CAGR of 6.4% for the five-year period

29

2008-2013, which is expected to drive the market to a value of $5,727.7 million by the end of
2013. Comparatively, the Chinese and Japanese markets will grow with CAGRs of 5.7% and
1.2% respectively, over the same period, to reach respective values of $34,433.6 million and
$23,822.4 million in 2013.
MARKET VALUE
The Indian consumer electronics market grew by 7.7% in 2008 to reach a value of $4.2
billion. The compound annual growth rate of the market in the period 2004-2008 was
9.5%.Electricals and electronics retailers sales proved the most lucrative for the Indian
consumer electronics market in 2008, generating 91.1% of the market's overall revenues. Sales
from discount,variety store, and general merchandise retailers generated 7.2% of the market's
aggregate revenues.

MARKET VALUE FORECAST

In 2015, the Indian consumer electronics market is forecast to have a value of $7.5 billion, an
increase of 36.5% since 2008. The compound annual growth rate of the market in the period
2008-2013 was predicted to be 6.4%.

HOUSEHOLD APPLIANCES
The household appliances market reflects the sale of six product sectors: refrigeration
appliances (including fridges, freezers and fridge freezers), cooking appliances (including
cookers, microwaves, ovens, cooker hoods, food processors and toasters), washing appliances
(including washing machines, clothes dryers and washer-dryers), room comfort and water
heater appliances (which include air conditioning, circulating and ventilation fans, space

30

heaters and water heaters), vacuum cleaners, and dishwashers. The market value has been
calculated using manufacturer selling prices. The performance of the market is forecast to
decelerate, with an anticipated CAGR of 10% for the five-year period 2008-2013, which is
expected to drive the market to a value of $7.7 billion by the end of 2013.The Indian
household appliances market has grown at a strong rate in recent years. Further strong growth
is expected for the forecast period.
The Indian household appliances market generated total revenues of $4.8 billion in 2008,
representing a compound annual growth rate (CAGR) of 12.5% for the period spanning 20042008. In comparison, the Japanese and Chinese markets grew with CAGRs of 1.1% and 7.5%,
respectively, over the same period, to reach respective values of $18.6 billion and $24.4 billion
in 2008.
Market consumption volumes increased with a CAGR of 13.2% between 2004-2008, to reach
a total of 34.7 million units in 2008. The market's volume is expected to rise to 52.2 million
units by the end of 2013, representing a CAGR of 10% for the 2008-2013 periods.
Refrigeration appliance sales proved the most lucrative for the Indian household appliances
market in 2008, generating total revenues of $1,445.3 million, equivalent to 30% of the
market's overall value. In comparison, sales of cooking appliances generated revenues of
$1,405 million in 2008, equating to 29.1% of the market's aggregate revenues.
The performance of the market is forecast to decelerate, with an anticipated CAGR of 10% for
the five-year period 2008-2013, which is expected to drive the market to a value of $7.7
billion by the end of 2013. Comparatively, the Japanese and Chinese markets will grow with
CAGRs of 0.4% and 4.7%, respectively, over the same period, to reach respective values of
$18.9 billion and $30.7 billion in 2013.

31

MARKET VALUE
The Indian household appliances market grew by 9.4% in 2008 to reach a value of $4.8
billion. The compound annual growth rate of the market in the period 2004-2008 was 12.5%.
MARKET VOLUME
The Indian household appliances market grew by 11.8% in 2008 to reach a volume of 34.7
million units. The compound annual growth rate of the market volume in the period 20042008 was 13.2%.Refrigeration appliance sales proved the most lucrative for the Indian
household appliances market, generating 30% of the total revenues. In comparison, cooking
appliance sales account for a further 29.1% of the market's revenue.
MARKET VALUE FORECAST
In 2015, the Indian household appliances market is forecast to have a value of $7.7 billion, an
increase of 60.7% since 2008. The compound annual growth rate of the market in the period
2008-2013 is 10%.
MARKET VOLUME FORECAST
In 2013, the Indian household appliances market is forecast to have a volume of 52.2 million
units, an increase of 50.4% since 2008. The compound annual growth rate of the market
volume in the period 2008-2013 is predicted to be 8.5%.

32

COMPETITION ANALYSIS
COMPETITION OVERVIEW
Samsung India (CURRENT MARKET SHARE-37%)
Initially the strategy of Samsung in India was to create premium image by emphasising global
brand. After facing stiff competition from another Korean major- LG, Samsung also started
playing price game. In 2004 it reverted back to its premium positioning, although it resulted in
some loss of market share. In line with the Global Digital Initiative of the Parent Company,
Samsung India acquired digital leadership in India by introducing its digital ready televisions
like the 40" LCD Projection TV, 43"Projection TV and the Plano series of Flat Colour
televisions.
LG India (CURRENT MARKET SHARE-23%)
LG Electronics rightly understood the consumer motivations to create magnetic products,
price them strategically, position them sharply and keep making the magnetism more potent.
Having understood the finer differences in consumer motivations, it opted for sharp-arrow
reasons-to-buy differentiation over the blanket-all approach taken by most of the other
players. It is an aggressive marketer. It focuses on low and medium price products.
Toshiba India
Toshiba India Private Limited (TIPL) is the wholly owned subsidiary of Japanese Electronics
giant Toshiba Corporation and was incorporated in India on September 2001. Toshiba had a
presence in India since 1985 and was represented in India through their Liaison Office.
Sony India (CURRENT MARKET SHARE-21-22%)
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.

33

Sharp India Ltd

Sharp India ltd was incorporated in 1985 as Kalyani Telecommunications and Electronics Pvt
Ltd, the company was converted into a public limited company in the same year. The name
was changed to Kalyani Sharp India in 1986. The company was entered into a joint venture
with Sharp Corporation, Japan - a leading manufacturer of consumer electronic products to
manufacture VCRs/VCPs/VTDMs. The company manufactures consumer electronic goods
such as TVs, VCRs, VCPs and audio products. The products were sold under the Optonica
brand name. Sharp has a production base in 26 countries with 33 plants, and its products are
used in 133 countries. The company was accredited with the ISO-9001 certification in the
month of February, 2001.
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.
Mirc Electronics (ONIDA)
The company commands strong brand equity among consumers largely owing to the success
of its Onida brand.
High-quality designs have made the company a leading player in the electronics and
entertainment business. Its popular devil ad although had engendered a strong emotional pull
towards the brand, technologically it represented no advancement. The company plugged the
gap by touting its digital technology. Like Videocon, it has also been able to hold its market
share. The world-class quality of Onida has enabled the company to make a breakthrough on
the export front. Onida is a leading brand in Gulf market and also exports its models to Africa,

34

Bangladesh, Sri Lanka and Nepal. It has technical tie-up with the Japan Victor Company,
better known as JVC. So focused is Onida on positioning itself on the premium, high-tech

plank that it is even planning to push its own envelope on obsolescence, much like Intel has
been doing in its own industry. The strategy is aimed at further broad basing the product
offering of the company, which has largely dominated the top-end of the television market,
across multiple market segments. Besides understanding the strategy adopted by different
players, several other factors- industry growth, concentration and balance, corporate stakes,
fixed cost, and product differences need to be analysed to determine the extent of rivalry
between the existing players.
Videocon (CURRENT MARKET SHARE-12%)
It is the market leader in the consumer electronics and home appliances segments in India;
the company manufactures home appliances such as refrigerators, microwave ovens,
compressors, air conditioners and washing machines.
It has plans to acquire Daewoos consumer electronics businesses worldwide to bring LCD
TVs, plasma TVs and components into its fold; the move would also help it acquire a
consuming partner for the recently-acquired Thomsons picture tube business. Videocon has
always been a price player and has an image of a low price brand. This entails providing more
features at a given price vis--vis competitors. It has taken over multinational brands to cater
to un served segments, like Sansui- to flank the flagship brand Videocon in the low to mid
priced segment, essentially to fight against brands like BPL, Philips, Onida and taken over
Akai- tail end brand or brands like Aiwa. Videocon is one of the largest manufacturers of
television and its components in India and thus has advantages of economies of scale and low
cost due to indigenisation. It has the widest distribution network in India with more than 5000
dealers in the major cities .It also has a strong base in the semi-urban and rural markets. Due
to its multi-brand strategy, it has at present multiple brands at the same price point. This has
led to a state of diffused positioning for its brands. It has also led to a cannibalisation of sales
among these brands. The flagship brand Videocon has lost market share due to the presence of
Sansui in the same segment. Because of reduction in import duties on CPT the cost advantage

35

of Videocon is also on the decline. Hence it is facing rough weather and also trying to boost
exports.

Panasonic India (CURRENT MARKET SHARE-6%)

Panasonic Corporation based in Osaka, Japan is a worldwide leader in the development and
manufacture of electronic products for a wide range of consumer, business, and industrial
needs. Panasonic Electric Works Co., Ltd. traces its roots to the company started in 1918 by
Konosuke Matsushita. Panasonic India plans to invest USD 100 million in its new plasma TV
production facility in 2011.
The company currently has five production units in the country, at Noida, Gurgaon, Vadodara,
Chennai and Delhi. It also launched the worlds slimmest, 1-inch plasma TV called Vierra PDP
Z1.According to Panasonic The market potential for plasma TV was much greater in India
than China, the demand for such high-end sets was increasing at a rate of 4-10 per cent in the
country. The company has priced its plasma TV between Rs 24,000 and Rs 30 lakh (for a 103inch screen). It has already sold ten such units this month.

SWOT ANALYSIS
Strengths
Presence of established distribution network in both rural and urban networks
Presence of well known brands
In recent years, the organised sector has increased its share in the market vis a vis the
unorganised sector
Weakness

36

The demand is seasonal and is highest only during the festive seasons
Low purchasing power of consumers

Opportunities

In India, the penetration level of the white goods is much less than other countries
Unexploited rural market
Rapid urbanization
Increasing the earning capacity of the customers
Easy availability of finance

Threats

Higher import duties on the raw materials imposed

Cheap imports from Singapore, China and other Asian countries.

CHAPTER 4

Consumer Goods Products and services

Consumer electronics (brown goods)
o Televisions
o Audio and video systems
o CD and DVD players

37

o Personal computers

o Laptops
o Digital cameras
o Electronic accessories
o Camcorders
Consumer appliances (white goods)
o Air conditioners
o Refrigerators
o Washing machines
o Sewing machines
o Electric fans
o Cleaning equipment
o Microwave ovens
o Other domestic appliances

Consumer electronics- key products

Colour TVs (CTVs)
CTVs are the largest contributors to this segment; market size estimated at 18 million
units in 2010.
During this period, 21-inch CTVs dominated the market with a 65 per cent share
Liquid crystal displays (LCDs)
LCDs are perceived as high-end products
Indian LCD market in 2010 was about 3.2 million units

38

The price decline due to relatively low import duty on LCD panels and the introduction
of small entry-size models have triggered growth in LCD sales
Digital video discs (DVDs)
The Indian DVD market was estimated at 6.2 million units in 2009
The organised market accounts for 80 per cent of the total DVD market
Direct-to-home (DTH)
The set-top box (STB) market is growing rapidly, due to the expansion of DTH and
introduction of the conditional access system (CAS) in metros
During 2010-2012, the subscriber base is expected to grow from 23 million to 42
million, making India the largest DTH market in the world.

39

Refrigerators
The Indian refrigerator market was estimated at 6.5 million units in 2010, the largest in this
segment
Reduction in prices and high demand for frost-free segment are driving growth
Air conditioners (ACs)
ACs are perceived as high-end products, current penetration stands at 3 per cent
Split ACs is driving growth in the market
Washing appliances
Washing machines are the second largest contributor to this segment after refrigerators; total
market in 2010 was 4.7 million units
Fully automatic washing machines are garnering an increasing share of the market due to
reduction in prices
Electric fans
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

40

Top Performing Companies in the FMCD sector

COMPANY

BLUE STAR

PRODUCT CATEGORY

ACs, refrigerators and specialty cooling products

DAIKIN

ACs and cooling equipment

GODREJ

Refrigerators, ACs, washing machines, microwave

ovens, DVD players, digital-imaging products and
audio-visual products

L.G
(LIFE S GOOD)

Audio-visual solutions, computers, mobile phones,

refrigerators, washing machines, microwave
ovens, vacuum cleaners and ACs

ONIDA

LCDs, washing machines, DVD players, ACs,

microwave ovens, mobile phones, projectors and
display products

PHILIPS

TVs, home theatre systems, DVD players, audio

products, personal care products, household
products, computers and phones

SAMSUNG

TVs, home theatre systems, DVD players, mobile

phones, digital cameras and camcorders,
refrigerators, ACs, washing machines, microwave
ovens and computers

SONY

TVs, projectors, DVD players, audio systems,

home theatre systems, digital cameras and
camcorders, computers, video-gaming products
and recording media

VIDEOCON

WHIRLPOOL

TVs,
DVD
players,
microwave
ovens,
refrigerators, washing machines, ACs and power
backup solutions
Refrigerators, washing machines, microwave
ovens, water purifiers and power backup solutions

CHAPTER 5
JOB OPPORTUNITIES FOR MBAS

41

Fast Moving Consumer Durables industry creates a wide range of job opportunities. This
industry is a stable, diverse, challenging and high profile industry providing a wide range of
job categories like sales, supply chain, finance, marketing, operations, purchasing, human
resources, product development, and general management.
List of prospective roles for specialization students in FMCD Industry:

Product Manager
Sales Manager
Product Campaign Manager
Regional / Zonal manager
Vendor Development Manager
National Sales Manager

Product Manager - FMCD

Knowledge of:
- Promotional approaches.
- Branding.
- Overall marketing and sales practices and principles.
- Time management and organizational skills.
Skills to:
- Gather and report numerical data and produce statistical reports.
- Write exceptional original material, edit, proofread, and finalize written material.

Ability to:- Build effective internal and external partnerships and alliances.
- Work well with customer care, sales, design and development, finance, legal etc.
- Think analytically and be a problem solver.

42

- Provide excellent customer service.

- Maintain confidentiality of Company information when required.
- Create a team environment, be positive, and sustain employee morale.

Sales Manager
1. Formulate product-wise monthly sales and collection plans for his area and motivate his
team to deliver plans on Value growth and within specified discount and credit norms
2. Ensures that objectives laid out by the organization are delivered for the assigned
geography:
a. Pricing
b. Managing delivery of High Potential Key Retailer Plans / Channel Expansion Plans /
Fortress Company Plans
c. Billing to adequate number of accounts per sales personnel and Range
Selling
d. Developer
e. Ensuring all accounts are working to optimum capacity
3. Maintain and nourish strategic relationship with key channel partners for greater stock
uptake and to garner market intelligence.

4. Implement Town/cluster specific demand Generation activities to enhance brand preference

among influencers/consumers as also implement National / Regional DG Initiatives.
5. Adhere to the laid down sales processes in respect of :

43

- Inviolable Controls
- PDR (Plan -do-review)
- PJP (Permanent Journey Plans)
- DSR (Daily Sales Reports)
- Sales Forecast
- Customer Service (CSO Tele caller C&F Manager)
To ensure standardization of processes for effective sales strategy execution
6. Drive timely completion of Performance Management exercise and identify the training and
development needs of the team.
Functional Responsibilities/Network (kindly limit to a maximum of five)
- Interaction with the Regional Logistics Manager on depot operation and

supplies

- Interaction with the Regional Trade Marketing Manager on demand generation and
activation plans
- Interaction with the Regional Commercial Manager and Accounts department - Interaction
with the Regional Human Resource Manager for all HR requirements.

Product Campaign Manager

- Work closely with the different business groups and others to develop marketing campaigns
- Work with the business groups and Sr. leadership/management team on planning
conferences, messaging and collateral

- Drive differentiation of Philips products vs. competition

- Lead Patient activation campaigns to increase patient flow for new technologies and create
market awareness
- Work with corporate marketing team on PR and media related activities

44

- Manage relationships with Agencies

Regional/Zonal Manager
- Responsible for overall performance of assigned group of branches in the zone.
- Maintain monthly forecast and sales pipeline
- Prepare Weekly and Monthly Sales reports.
- Assist in monitoring overall customer satisfaction.
- Maintain records on other related market activities including those on competitive products
to advise management accordingly.
- Use knowledge of the local market to assist management in developing the appropriate mix
of products for your regional market.
- Create and execute on detailed sales plan to achieve revenue objectives

Vendor Development Manager

- The incumbent shall occupy a key position as part of the overall supply chain of the
business, and shall be responsible for procurement of all input materials (raw materials and
packaging materials) for the personal care products business on a timely basis and as per
planned requirements, and at minimal cost.

- Evaluate the requirements of a rapidly growing business, and fine tune the procurement
model on a regular basis.
- Inculcate global best practice into the procurement function, especially in the areas of
supplier relationship management, performance monitoring, inventory management and
logistics, etc.

45

- Responsible for resolution of all issues related to quality, specifications, revalidations,

damages/losses, etc.
- Work closely with product development teams to identify product improvement projects
together with suppliers.
- Function as a team player to implement end to end solutions across the supply chain,
including interactions with the demand planning, manufacturing and logistics teams and
vendors & other external agencies.

National Sales Manager

Major Job responsibilities:
- Handling Sales for domestic market,
- Chalking & implementing Strategy, brand management.
- Managing distributors & offline channel sales.
- Responsible for P&L account of the Organization.

Salaries Paid for Fresher

Salaries are different from post to post of the manager in FMCD sector for Fresher in MBA.
Regarding some of the companies the list for the salary for fresher are as follows:
Sales Manager
Salary: INR 1, 50,000 - 3, 00,000 P.A. Conveyances, Mobile Allowance

Product Manager
Salary: INR 2.5,00,000 - 3, 00,000P.A
Relationship Manager
Salary: INR 2, 00,000 - 3, 00,000P.A

46

Regional Manager
Salary: INR 1.5,00,000 - 3, 00,000P.A
Vendor Development Manager
Salary: INR 1.5,00,000 - 3, 00,000P.A
National Sales Manager
Salary: INR -2, 00,000 - 3, 00,000P.A

CHAPTER 6
SUMMARY AND CONCLUSIONS
Summary
Consumer Durables Industry in India to post ~15% CAGR growth over next five years.
We believe that the consumer durables industrys growth has been two pronged: (a) driven
by lower penetration in rural markets and
(b) New innovations and replacement demand in urban markets.
Key growth drivers include:
1. Continued economic growth demonstrated through 8.4% CAGR growth in GDP over
last 5 years
2. Favourable demographics; 64% of the population in working age category
3. Increasing Urbanization, nuclear families
4. Increase in disposable incomes; which drives consumption
5. Increasing affordability coupled with declining prices of products
6. Lower consumer product penetration
7. Availability of new products and technologies,

47

8. Easy financing schemes and

9. Increase in organized retail
However, increasing raw material prices, intense competition and increased cost of service
and distribution are major challenges being faced by industry.
Valuation and view: In a scenario of shorter product life cycles and increasing competition,
we believe that the companies with strong R&D, wide distribution network, strong brand
would dominate the segment. Indian consumer durables sector has limited stock selection
available for value investors.
Conclusion
We believe that the Indian consumer durables industry will post strong double digit growth
of ~15% over the next 5 years.
We believe that the industry will continue to grow led by lower penetration, increasing
disposable income, easy credit availability coupled with declining prices. Increasing rural
demand would be the key feature of the industry growth going ahead.
However, increase in raw material prices and intense competition among players, are key
challenges for the industry.
In a scenario of shorter product life cycles and increasing competition, we believe that the
companies with strong R&D, wide distribution network, strong brand would benefit most
from the strong industry growth.

Of the key listed consumer durable stocks, we like Bajaj Electricals primarily due to its
strong rural reach coupled with diversified product portfolio (small domestic appliances) and
strong balance sheet. We also like TTK prestige given the strong demand growth for its
product, innovative product launches and sound fundamentals; one can consider investing in
this stock even though it is trading at rich valuations.

48

In the small cap space, the stock to watch out for is Hitachi Home & Lifestyle. It is well
placed to benefit from strong growth in AC segment and it is aggressively launching products
to carve a niche for itself.
However, as most of the companies in consumer durable space are mid-cap and small cap
companies (Market capital less than Rs. 32bn), they have an inherent liquidity risk and high
volatility risk attached to them.