The revenues for the consumer durables sector in India are expected to grow by 15 to 18 per cent to Rs 1 lakh crore this fiscal, led by an increase in their volume. The volume is expected to rise 10-13 per cent in 2022-23, said rating agency CRISIL in a report on Wednesday.
“Demand will be driven by both urban and rural segments, though rural demand will come into play in the second half of the fiscal,” it said.
The industry had crossed the pre-pandemic mark in value terms last fiscal and in the current fiscal year it is expected to scale past the pre-pandemic mark by 3 per cent, it added.
Profitability, however, will decline marginally due to higher raw material prices and adverse foreign exchange movements, it added, the credit risk profiles of the sector will remain comfortable due to their strong balance sheets.
“In the last two fiscals, pandemic-led disruptions had impacted consumer sentiment and peak season demand. This fiscal, healthy growth in urban income and higher crop prices, which are expected to sustain farmer incomes, will push demand for consumer durables,” said Pushan Sharma, Director, at CRISIL Research.
However, the drought situation in eastern India and monsoon progress remain key aspects to monitor, Sharma added.
According to Anand Kulkarni, Director, CRISIL Ratings: “Over the near-to-medium term, capital expenditure may increase because of the government’s Production-Linked Incentive (PLI) scheme for ACs, though this is likely to be done in a phased manner, without impacting credit profiles.”
Demand for televisions would be driven by shorter replacement cycles, multiple ownerships, and a preference for larger screens. Technological advancement, high competition and a consequent significant reduction in prices have also aided demand in this segment.
PLI scheme on ACs is aimed to gradually reduce India’s import dependency on some of the key raw material components of ACs such as compressors, heat exchangers and control assemblies over the next five years.