The Hindu Business Line : Consumer durables: Sales growth accelerates

Room air-conditioners and home appliances such as water heaters, kettles, iron boxes and pressure cookers were some of the products that saw strong growth.

Whirlpool of India has recorded a 34 per cent sales growth in the latest quarter compared to 23 per cent last year.

Many others such as Bajaj Electricals (sales up 35 per cent), TTK Prestige (up 28 per cent) and V-Guard Industries (up 28 per cent) too have seen sales pick up, on top of fairly robust numbers last year.

Retail demand drivers

Factors such as the boost to incomes from the Pay Commission hikes, strong demand in Tier II towns and a revival in urban spending helped durables sales. Companies that catered to the industrial segment saw much slower growth than those catering to the retail consumer.

Two companies in our list that reported lower than average growth in sales are Blue Star and Voltas. As Blue Star’s sales were hit by a fall in demand from the corporate segment, fall in export orders weighed on Voltas’ sales.

Further, both the companies’ engineering and services division depend on industrial capex, where there has been a visible slow down. Blue Star, which derives revenues mainly from the corporate segment, saw its sales dip 13 per cent, this quarter. Voltas however managed a 9 per cent sales growth with a higher exposure to the retail household market.

Profits too grew at a faster pace than sales for these companies, with good sales on one hand and savings on raw material costs on the other. TTK Prestige, Hawkins Cookers and Bajaj Electricals effortlessly doubled profits. Whirlpool of India made further progress on its turnaround with its net profit at Rs 25 crore from just Rs 1.74 crore in September 2008. Operational efficiencies and savings in interest cost together with the sales growth helped this.

Margins expand

Irrespective of whether there has been a growth or decline in sales, all companies in the consumer durable space have seen margin expand; thanks to the correction in commodity input prices (copper, aluminium and steel).

Players such as Hawkins Cookers and TTK Prestige saw an over 6 percentage point expansion in margins at the operating level. Blue Star reported a 2 per cent point increase in operating margins.