Consumer Durables indian market overview 2012

8/13/2019 Consumer Durables indian market overview 2012

http://slidepdf.com/reader/full/consumer-durables-indian-market-overview-2012 1/34

11

For updated information, please visit www.ibef.org

Consumer Durables NOVEMBER

2011



22

ContentsAdvantage India

Market overview and trends

Growth drivers

Success stories: Videocon, LG, Samsung

Opportunities

Useful information



2011



33

Consumer Durables

For updated information, please visit www.ibef.org ADVANTAGE INDIA

Advantage India

NOVEMBER

2011

AdvantageIndia

• Growth in consumer durables likely toaccelerate as disposable incomes andadoption of plastic credit rise

• Additionally, increasing electrificationof rural areas would augmentdemand

• Rural markets expected togrow at a CAGR of 25 per centfrom USD2.1 billion in FY10 toUSD6.4 billion in FY15

• Huge untapped ruralmarkets —only 2 per centpenetration for refrigeratorsand 0.5 per cent for washingmachines

• Sector attracted significantinvestments even during globalrecession

• USD1 billion worth of investments inproduction, distribution and R&D inthe next few years

• 100 per cent FDI allowed in theelectronics hardware-manufacturingsector under the automatic route

• Duty relaxation, schemes such asEPCG, EHTP to provide tax sops

Market size-USD12.5billion

FY15E

Market size-USD2.9billion

FY03

Source: Corporate Catalyst India, FY15E - estimate for financial year 2015. Based on growth estimates by Corporate Catalyst India,Moneycontrol , GEPL capital

Notes: FDI – Foreign direct investment, FY- Indian financial year (April – May), USD- US Dollar, EPCG- Export Promotion Capital Goods

Scheme, EHTP- Electronic Hardware Technology Park

Growing demand Opportunities

Increasing investments Policy support



44



Growth drivers


Opportunities

Useful information



2011



55For updated information, please visit www.ibef.org MARKET OVERVIEW AND TRENDS

The consumer durables market is splitinto two segments

Consumer DurablesNOVEMBER

2011

Consumerdurables

Consumerelectronics

(brown goods)

Televisions Audio and video systems

CD and DVDplayers

Personalcomputers

Laptops Digital cameras

Electronicaccessories Camcorders

Consumerappliances

(white goods)

Air conditioners Refrigerators

Washingmachines

Sewingmachines

Electric fans Cleaning

equipment

Microwaveovens

Other domesticappliances

Source: Electronic Industries Association of India, Corporate Catalyst India, Aranca Research



66For updated information, please visit www.ibef.org

Evolution of the Indian consumerdurables sector

MARKET OVERVIEW AND TRENDS


2011

• Closed market• Increased product

availability,increased mediapenetration andadvertising

• Liberalisation of markets• Influx of global players

such as LG and Samsung• Shift in focus from

promotion to productinnovation

• Increasing availabilityand affordability ofconsumer financeprovides impetus togrowth

• Low penetration of

high-end products suchas air conditioners (<1percent)

• Companies look toconsolidate marketshare

• Indian companies suchas Videocon gainingglobal identity

• Increasing penetrationof high-end products

such as air Conditioners(>3 percent)• Introduction of new

aspirational productssuch as High DefinitionTVs (HDTVs)

Source : Financial Express, ApplianceMagazine, Aranca Research

Introductorystage

Mid and late1990s

Liberalisationstage

Early 2000s

Growth stage

Late 2000s

ConsolidationStage

1980s andearly 1990s


http://slidepdf.com/reader/full/consumer-durables-indian-market-overview-2012 7/3477For updated information, please visit www.ibef.org

Consumer durables revenues have beengrowing at a healthy pace … (1/2)

→ The consumer durables market recorded revenues ofUSD6.3 billion in FY10

→ During FY03-10, the industry expanded at a CAGR of11.7 per cent

Size of consumer durables market

Source : Electronic Industries Association of India,Corporate Catalyst India, Aranca Research



2011

2.93.2 3.5

3.84.2

4.7 5.2

6.3

0

1

2

3

4

5

6

7

FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

USD billion

Notes: FY – Indian Financial Year (April-March), USD – US DollarCAGR – Compound Annual Growth Rate



Consumer durables revenues have beengrowing at a healthy pace … (2/2)

→ Urban markets lead the revenues, accounting for two-thirds of the total sales in India

→ Rural and semi-urban markets are growing at aremarkable pace over the last few years on account of

high sales in products such as TVs, washing machinesand water purifiers

Composition of consumer durables market (FY 2010)

Source : Electronic Industries Association of India,Corporate Catalyst India, Aranca Research



2011

33%

67%

Rural

Urban



Consumer electronics- key products



2011

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 witha 65 per cent share

Liquid crystaldisplays (LCDs)

• LCDs are perceived as high-end products•

Indian LCD market in 2010 was about 3.2 million units• 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 DTHand introduction of the conditional access system (CAS) in metros

• During 2010-2012, the subscriber base is expected to grow from 23 million to 42million, making India the largest DTH market in the world

Source : Electronic Industries Association of India, Corporate Catalyst India,India Infoline, TV Veopar Journal 2011, Business Line, Aranca Research




Consumer appliances- key products



2011

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 are driving growth in the market

Washing appliances

• Washing machines are the second largest contributor to this segment afterrefrigerators; total market in 2010 was 4.7 million units

• Fully automatic washing machines are garnering an increasing share of themarket 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

Source : Electronic Industries Association of India, Corporate Catalyst India,TV Veopar Journal 2011, Aranca Research




Key players in the consumer durablessector … (1/2)

*This list is indicative.


Company Product category

ACs, refrigerators and specialty cooling products

ACs and cooling equipment

Refrigerators, ACs, washing machines, microwave ovens, DVD players, digital-imaging products

and audio-visual products

ACs and refrigerators

TVs, audio-visual solutions, computers, mobile phones, refrigerators, washing machines,

microwave ovens, vacuum cleaners and ACs

LCDs, washing machines, DVD players, ACs, microwave ovens, mobile phones, projectors and

display products


2011




Key players in the consumer durablessector … (2/2 )

*This list is indicative.


Company Product category

TVs, home theatre systems, DVD players, audio products, personal care products, household

products, computers and phones

TVs, home theatre systems, DVD players, mobile phones, digital cameras and camcorders,

refrigerators, ACs, washing machines, microwave ovens and computers

TVs, projectors, DVD players, audio systems, home theatre systems, digital cameras and

camcorders, computers, video-gaming products and recording media

TVs, DVD players, microwave ovens, refrigerators, washing machines, ACs and power backupsolutions

Refrigerators, washing machines, microwave ovens, water purifiers and power backup solutions


2011




Major trends in the consumer durablessector

Increasing presenceof organised retail

• Emergence of speciality retailers, such as Croma, Next and eZone, is intensifyingcompetition

• Companies are setting up exclusive stores or single-brand retail outlets

Expansion into newsegments

• Companies are venturing into new product segments, such as high-definitiontelevisions (HDTVs) and smartphones, buoyed by rising consumer incomes andeasy availability of credit

Increasedaffordability of

products

• Advancement in technology and higher competition are driving price reductionsacross various consumer durable product segments such as computers, mobilephones, refrigerators and TVs


Focus on energy-efficient andenvironment-

friendly products

• Leading companies have introduced star-rated, energy-efficient ACs andrefrigerators

• Companies also plan to increase the use of environment-friendly componentsand reduce e-waste by promoting product recycling


2011



1414



Growth drivers


Opportunities

Useful information



2011



1515For updated information, please visit www.ibef.org GROWTH DRIVERS

Strong demand and policy supportdriving investments


2011

Stronggovernment

support

Large domesticmarket

Growing demand

Inviting Resultingin

Growing demand Increasing investmentsPolicy support

Higher realdisposable

incomes

Easy consumercredit

Growingconsumer base

Setting up ofEHTPs

Increasingliberalisation,

tariff relaxation

Policy sops,favourable FDI

climate

Expandingproduction anddistribution

facilities in India

Increased R&Dactivity

Providing supportto global projects

from India

Notes: EHTP- Electronic Hardware Technology Park, FDI- ForeignDirect Investment, R&D- Research and Development




Income growth will drive consumerdurables demand

→ Multiple drivers are leading to a growth in the Indian consumer durables sector

→ Significant increase in discretionary income and credit availability lead to shortened product replacement cyclesand evolving lifestyles where consumer durables, such as ACs and LCD TVs, are perceived as utility items ratherthan luxur y possessions

→

Growth in middle and upper sections of the population is also driving demand for consumer durables

Per-capita GDP growth

Source : IMF, Aranca Research


2011

Real GDP growth projections

Source : IMF, Aranca Research

4.6%

6.9% 7.6%

9.0% 9.5%

10.0%

6.2%6.8%

10.1%7.8%

7.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

10

2030

40

50

60

70

2002 2004 2006 2008 2010 2012F

GDP constant prices (INR trillion) Annual growth rate-RHS

2.1%2.8%

5.1%

6.4%

7.5% 8.0% 8.3%

4.6% 5.2%

8.8%

0%

1%

2%

3%

4%5%

6%

7%

8%

9%

10%

2001 2003 2005 2007 2009

GROWTH DRIVERS

Notes: Growth projections have been taken from the IMF




Policy support aiding growth in thesector

GROWTH DRIVERS

Customs dutyrelaxation

• IT/Electronics sector the first in India to be allowed complete customs exemptionon certain items used for manufacturing electronic goods

• The peak rate of basic customs duty is 10 per cent• Imports of parts of printers and drivers have been exempted from special

additional duty of 4 per cent

Reduced centralexcise

• The mean rate of excise duty is 10 per cent•

Components and accessories of mobile handsets and PC connectivity cables areexempt from excise

Encouragement toFDI

• 100 per cent FDI is permitted in the electronics hardware-manufacturing sector under the automatic route

Source : Department of Commerce, Government of India ; Corporate Catalyst India, Aranca ResearchNotes: FDI - Foreign Direct Investment, EPCG- Export Promotion Capital Goods scheme,

EHTP- Electronic Hardware Technology Park Scheme

EPCG, EHTP schemes• EPCG allows import of capital goods on paying 3 per cent customs duty• EHTP provides benefits, such as duty waivers and tax incentives, to companies

which replace certain imports with local manufacturing


2011




Recent Investments by key players

GROWTH DRIVERS

Source : Company websites, The Hindu, Economic Times, BusinessStandard, Aranca Research

Notes: R&D- Research and Development


2011

2009

• Jun 09: LG doubles theannual R&D investmentoutlay to USD83.3 million

• Nov 09: Samsungallocates USD100 millionfor capacity expansion atexisting plants

• Dec 09: Panasonicdesignates USD300million investment toconsolidate position inAC segment

2010

• May 10: LG earmarksaround USD85 million for

upgrading Indian plants• Sep 10: Haier invests to

open 75 new retail stores(called ExperienceCentres) in India in 2010

• Nov 10: Samsunginaugurates USD75million manufacturingfacility in Chennai

2011

• Feb 11: Whirlpoolannounces USD25 millioninvestment in FY11

• Apr 11: Hitachi allocatesUSD400 million to set upR&D centre in Bangalore

• May 11: Panasonicestablishes its first R&Dcentre in India inGurgaon



1919



Growth drivers


Opportunities

Useful information



2011



2020For updated information, please visit www.ibef.org SUCCESS STORIES: VIDEOCON, LG, SAMSUNG

Videocon: The Indian behemoth … (1/2)


2011

→ Third largest consumer durables company in India

→ Holds a bout one-fourth market share in the consumerdurables market

→ Leads the market in colour TV, refrigerator, washingmachine, and microwave oven segments

Market share in consumer durables (FY10)

Source : Company website, ISM Capital, ArancaResearch

25%

75%

Videocon

Others



NOVEMBER




LG and Samsung: Compelling successstories … (1/4)


2011

SUCCESS STORIES: VIDEOCON, LG, SAMSUNG

→ Between them, LG and Samsung account for thelargest share of the market

→ Both companies entered the Indian market in the mid1990s

→ LG took the lead – its 2007 revenues (USD2.4 billion)were almost double of Samsung ‘s (USD1.3 billion)

→ However, high growth in mobile phone sales sawSamsung equal LG’s revenues by 2010 (USD3.6 billion)

Revenues

Source : Company websites, Aranca Research

2.4

3.3

1.3

3.3

0

1

1

2

23

3

4

2007 2010

LG Samsung

USD billions

NOVEMBER






2011


→ Before 2005, LG’s strategy was to offer affordableproducts, while Samsung focused on premiumofferings

→ After 2005, the two have expanded the scope of their

target markets and offer both functional and high-endproducts

→ New market development and product innovationhave been the key success factors for the companies

Expanding target markets


```

PremiumSegment

MassSegment

Before 2005

SamsungLG

After 2005

NOVEMBER






2011


→ In FY10, LG and Samsung comprised of about one-third of the consumer durables and mobile phonemarkets combined

→ Between the two, Samsung leads the mobile handset

and premium flat panel TV market

→ LG has a stronger presence in other consumerdurables, including refrigerators, washing machines,microwave ovens, air-conditioners and televisions

Consumer durables and mobile phones: market share


14%

15%

71%

LG

Samsung

Others

NOVEMBER






2011


→ LG expects India’s share in its global revenues todouble to 12 per cent in FY15 from 6 per cent in FY10 ;Samsung anticipates a similar increase from 2.5 percent to 5 per cent

→ The Korean giants are also looking at India as amanufacturing base for other markets and areramping up investments accordingly

→ LG currently exports to countries in the Middle East,Africa, Southeast Asia and Europe from India

India’s share in company’s global revenues


0%

2%

4%

6%

8%

10%

12%

14%

FY10 FY15E

LG Samsung



2626



Growth drivers


Opportunities

Useful information



2011



NOVEMBER



2828For updated information, please visit www.ibef.org OPPORTUNITIES

Consumer durable firms to augmentinvestments in coming years … (1/2)


2011

→ Videocon, India’s third largest consumer durables manufacturer, plans USD333 million capex for setting up a LCDmanufacturing plant in Chennai by the end of 2011

→ Market leader LG has earmarked around USD292 million for enhancing production capacity and strengthening its LGbrand shop network by 2012

→ Japan’s Panasonic plans to invest USD208 million by 2014 in setting up manufacturing units and an advanced R&Dcentre

→ Samsung, India’s second largest consumer durables maker, plans to invest USD94 million to expand capacity by 2015

→ LCDs are expected to be one of the fastest growing segments, growing at a phenomenal CAGR of 87.6 per centduring 2009-12

USD- US Dollar, LCD- Liquid Crystal Display

NOVEMBER



2929For updated information, please visit www.ibef.org OPPORTUNITIES

Consumer durable firms to augmentinvestments in coming years … (2/2)


2011

LCD TV shipments

Source : TV Veopar Journal 2011, estimates by IHS iSuppliMarket Intelligence, Aranca Research

Upcoming investments by major players

Source : Business Standard, Company websites, ArancaResearch

1.5

3.3

6.3

9.9

0

2

4

6

8

10

12

2009 2010 2011E 2012E

millionunits

CAGR:87.6%

333

292

208

94

42

21

13

0 100 200 300 400

Videocon

LG

Panasonic

Samsung

Havells

Godrej

Onida

USD million



3030



Growth drivers


Opportunities

Useful information



2011

blNOVEMBER



3131For updated information, please visit www.ibef.org USEFUL INFORMATION

Industry associations … (1/2)

Consumer Guidance Society of IndiaBlock 'J' Mahapalika Marg, Mumbai –400 001Tele fax: 91-22 22621612/2265 9715E-mail: [email protected]: www.cgsiindia.org

Retailers Association of India111/112, Ascot Centre, Next to Hotel Le Royal Meridien,Sahar Road, Sahar, Andheri (E), Mumbai –400099.Tel: 91-22-28269527 —28Fax: 91-22-28269536Website: www.rai.net.in

Consumers Association of India3/242, Rajendra Gardens, Vettuvankeni, Chennai,Tamil Nadu –600 041Tel: 91-44-2449 4576/4578Fax: 91-44-2449 4577E-mail: [email protected]

Consumer Durables 2011

C D blNOVEMBER



3232For updated information, please visit www.ibef.org USEFUL INFORMATION

Industry associations … (2/2)

Consumer Electronics and Appliances Manufacturers Association5th Floor, PHD House4/2, Siri Institutional Area, August K ranti MargNew Delhi-10 016Telefax: 91- 11- 46070335, 46070336

e-mail: [email protected]: www.ceama.in

ELCINA Electronic Industr ies Association of India (Formerly ElectronicComponent Industries Association)ELCINA House, 422 Okhla Industrial Estate, Phase IIINew Delhi -110020Tel: 91- 11- 26924597, 26928053

Fax: 91- 11- 26923440e-mail: [email protected]: www.elcina.com


C D blNOVEMBER




Glossary

→ CAGR: Compound Annual Growth Rate

→ Capex : Capital Expenditure

→ CENVAT : Central Value Added Tax

→

EHTP: Electronic Hardware Technology Park→ EPCG: Export Promotion Capital Goods Scheme

→ FDI: Foreign Direct Investment

→ FY: Indian financial year (April to March)

→ So FY10 implies April 2009 to March 2010

→ LCD: Liquid Crystal Display→ R D: Research and Development

→ USD: US Dollar

→ Conversion rate used: USD1= INR 48

→ Wherever applicable, numbers have been rounded off to the nearest whole number

USEFUL INFORMATION


C D blNOVEMBER



India Brand Equity Foundation (IBEF) engaged Aranca toprepare this presentation and the same has beenprepared by Aranca in consultation with IBEF.

All rights reserved. All copyright in this presentation andrelated works is solely and exclusively owned by IBEF.

The same may not be reproduced, wholly or in part inany material form (including photocopying or storing it inany medium by electronic means and whether or nottransiently or incidentally to some other use of thispresentation), modified or in any manner communicatedto any third party except with the written approval ofIBEF.

This presentation is for information purposes only. While

due care has been taken during the compilation of this

presentation to ensure that the information is accurate tothe best of Aranca and IBEF’s knowledge and belief, thecontent is not to be construed in any manner whatsoeveras a substitute for professional advice.

Aranca and IBEF neither recommend nor endorse any

specific products or services that may have beenmentioned in this presentation and nor do they assumeany liability or responsibility for the outcome of decisionstaken as a result of any reliance placed on thispresentation.

Neither Aranca nor IBEF shall be liable for any direct orindirect damages that may arise due to any act oromission on the part of the user due to any reliance

placed or guidance taken from any portion of thispresentation.

Disclaimer


Consumer Durables indian market overview 2012

Documents

Transcript of Consumer Durables indian market overview 2012