KOLKATA: White goods sales volume grew in double digits year on year for the first time in three

years in the April-June quarter, reflecting a positive shift in consumer sentiment and kindling hopes of
a good year for home appliance makers.
Air-conditioners led the revival with volume sales in the first quarter rising 21% compared to the year-
ago period, according to retail audit data of market tracker GfK. Sales volume of refrigerators and
washing machines rose 15% during the quarter.

Buoyed by the uptick, companies now plan a slew of launches in the upcoming festive season to woo
consumers. White goods sales is often considered as one of the barometers of the economy.

"We will be rolling out an array of consumer offers and new products during the festive
season," PanasonicIndia managing director Manish Sharma said.
He said the industry wants to make up for the lost time.

Volume sales of premium split air-conditioners grew 24% in the June quarter while window air-
conditioners grew 10%.

"The industry has witnessed healthy growth this summer due to a good summer, a patchy monsoon,
conspicuous revival of consumer sentiments, and easier availability of consumer finance," said
Pradeep Bakshi, president and chief operating officer at Voltas.

Voltas outpaced the overall industry with almost 30% volume growth in the first quarter, which helped
it improve its market share in the air-conditioner market to around 21%.
Air-conditioner sales saw a jump after three consecutive years of sales decline due to a range of
factors including rising prices, slowing economy, poor consumer sentiment and a not-so-hot summer
last year. Refrigerators and washing machines have grown at flat to marginal single digit volume
growth in last three years.

Marketers such as Voltas, Panasonic, Godrej Appliances and Videocon expect high double digit
growth rate in the coming months as the economy is expected to speed up and Indian consumer
sentiment is already high. Patchy monsoon too is expected to push air-conditioner sales in the July-
September quarter.
Consumer finance falls by countryside

MUMBAI: Consumer Finance majors like GE Countrywide and ICICI have seen a reduction in
volumes since 2002 with most of the growth coming in from the semi-urban and rural markets where
they have a limited presence.

Growth in the consumer durable industry has, in recent months, been primarily driven by the lower
end of the market. In urban markets, industry sources say, only buyers of higher-end products like air-
conditioners have opted for finance schemes.

Beginning 2002, products sold through consumer finance recorded a growth of 20 per cent compared
to expectations of 50 per cent.

Senior industry officials said that lower-end products offered little by way of margins to the organised
players. Most of them are unwilling to invest in the requisite infrastructure in smaller markets fearing
poor returns.
According to C S Ravindran, president of Bajaj Auto Fnance, although growth targets have been
scaled down, its presence in the B and C towns helped it fare better than competitors.

"We had in fact thought of being very active this year in consumer durable financing. Market feedback
also tells us that the customer traffic overall has been relatively thinner this year" he said.

Industry sources say that dealers and local players in the `B' and `C' class markets have seized most
of the volumes. Manufacturers say that the price of most products has been dropped sharply in the
recent past as a result of which consumers have not really opted for loans.

Players like ICICI, as a result, seem to have now chosen to stick to 2-wheeler and car financing.
Company officials were unavailable for comment.

According to Anil Khera, COO of Kitchen Appliances, the organised finance players have not made
any attempt at beefing up their pres-ence in the rural markets.

"That's where our future volumes will come from. The middle-class buyers in the urban markets seek
financing options to only buy the higher-end products like air-conditioners " he said.

Consumer durable dealers, in fact, have sold more volumes through their own financing schemes
especially the zero interest schemes, compared to larger organised sector stories.

"By offering straight EMI schemes without any interest, dealers have sold faster thant he financiers"
said G Sunder, COO of Mirc Electronics.

Zero per cent schemes constituted more than 90 per cent of the overall schemes offered in the
market today while colour televisions constitutes more than 70 per cent of the total durables sold
through finance.

Meanwhile, CTV sales after picking up sharply in May 2002 on account of the World Cup football has
since dropped. Industry majors say volumes will pick up in September with the beginning of the
festive season.
Consumer finance : A win-win system for all

The Indian consumer is fast changing his habits, borrowing money to buy the products he wants, not
content with buying what he can afford. The resultant consumer boom is what market strategists
explain as the key to the success of the Indian consumer finance market. Consumer finance today is
a win-win system in which everyone stands to gain. For the Indian consumer, it is an opportunity to
upgrade his standard of living right now instead of waiting for years for his savings to accumulate. For
manufacturers, it stimulates demand and lowers inventory. For middlemen, it's a salesboosting
device. For players of consumer finance, it's a means of profit generation. The buy-now-pay-later
culture is still fairly nascent in India, evolving through various forms like consumer lending, consumer
credit, consumer loans, friendly and family borrowings, kitties, daily payment schemes etc. The basic
underpinning of consumer financing is that the consumers' present spending habits tend to be geared
to expectations of future income. They are losing their fear of borrowing, riding surfboards of
consumer finance. Along with buying a home, consumers prefer CF to buy home appliances and
vehicles, opting for CF based on the rate of interest, administrative fee, processing fee, commitment
charges, pre-payment penalty, types of facilities, standard and kind of services mix and sundry terms
and conditions. These are the members of a growing breed of normally conservative middle-class
Indians who are shedding their inhibitions about opting for CF loans despite the high interest cost.
Result: the corporate sector is flush with funds. Banks and CF companies are only too willing to lend,
injecting new blood into many a business. The banks are lending against collateral and have
concentrated on small potential borrowers to achieve disbursal targets. The Vijaya Bank offers Vstock
for loans against shares; VEquip loans to help professionals acquire equipment and vehicles; and V-
cash to enable clean loans against salaries after getting an employer's guarantee. The private sector
till date occupies a sizeable market of CF in India, the major players being, HDFC, LICHF, ICICI,
Apple, Kotak Mahindra, 20th Century, SBI, BoI, Citi-bank, Country-wide, StanChart and Whirlpool
among others. Manufacturing companies like Singer, introduced the easy-payment plan way back in
1994. Few middlemen and departmental stores too have tie-ups for providing consumer finance, while
some players even use internal funds and deposits for financing. Investment and finance companies
are even offering CF for medical needs under membership schemes. The credit card satisfies the
core need of CF through revolving credit for consumers. It is true that, because of the large number of
players, market pressures, increased competition, increased awareness and wider offerings,
consumer-financing activities need to become customer-oriented and user-friendly. CF also has its flip
side. It means a higher cost of burden that is linked with the consumers' perception about the cost of
CF. Few players from the unorganised segment even charge very high interest rates, making
financing options unattractive. But the lenders argue that this is necessary specially in the case of
home appliances where repossession in case of default becomes expensive. One of the perceived
problems relating to consumer finance is the absence of credit bureaus to rate the creditworthiness of
consumers. For the consumer finance companies to flourish, there is need to develop a credit
information system like the one launched by Onida Finance in 1994 and known as the individual credit
rating agency. (The author is a reader in marketing at Sardar Patel University, Vallabh Vidya- nagar.)