Kapil Mudholkar, Editor, The Hash Mag, got into an exclusive interaction with Mr. Kamal Nandi, Business Head & Executive Vice President, Godrej Appliances, to know more about the brand, business targets and 2018 roadmap.
With your upcoming Pune Facility, you are eyeing premium range products and you will be the first company to domestically manufacture large capacity appliances. Would you like to share the rationale behind this move?
At Godrej Appliances, we are undergoing an illustrious re-invention of our brand, shifting our perception from a mass to a premium brand. We are investing heavily in the premiumization of the brand and will be adding manufacturing lines in our existing Shirwal plant dedicated to manufacturing premium products. In this plant, we will be manufacturing high-end frost-free refrigerators and will be the first appliance brand in India to do so. We will also be adding new lines for the production of other categories like chest freezers, medical refrigerators and high-end refrigerators.
Earlier this year, we also launched our new brand campaign SOCH KE BANAYA HAI – backed by a high decibel media campaign to fuel our brand communication and establish Godrej Appliances as a premium brand.
The rationale behind our recent focus on premiumization is backed by the insight that consumers across the country, even those in Tier 2 and Tier 3 cities are buying more premium products. This can be attributed to a variety of factors – the growing middle class, evolving consumer lifestyles increase in household incomes and availability of easy finance options. Indians are not as spend adverse today and want to realise their aspirations early on in life. As an Indian brand, we want to offer them world-class products suited to their lives.
When it comes to any particular product range, which of your products currently draws the main attention?
While Godrej Appliances is known for its refrigerators, having the distinction of being the first Indian brand to manufacture refrigerators in India back in 1958, we have expanded since then into other appliances such as air conditioners, washing machines, microwave ovens, chest freezers and medical refrigerators. We are focussed on delivering relevant technology to differentiate all our product ranges. Our air conditioners, for example, are a matter of pride - being the world’s greenest air conditioners and setting efficiency benchmarks year on year, proving to be India’s most power-saving air conditioners while also being the most eco – friendly.
Do you think the Pune facility will enhance your efforts towards increasing the market share?
The premium products that will be manufactured in the Shirwal plant will help Godrej Appliances capture a piece of the premium pie, undoubtedly increasing our market share. We are aiming to be one of the top three appliances makers in India by 2020 with our focus being on premium products.
You also have plans to increase your revenue and the number of exclusive outlets. Would you like to share more about it?
We are targeting a revenue of Rs. 4000 crore by the end of this financial year. One of the upcoming channels is our exclusive brand outlets (EBOs). We are at close to 80 outlets and plan to take it to 150 outlets over the next 2 years.
We have seen an increase in the demand for premium products across the country over the past few years. However, due to lack of large format stores in Tier 2 and Tier 3 cities and limited floor space, the high-end products usually don’t get an adequate display. Our exclusive brand outlets launched particularly in Tier 2 and Tier 3 cities, provide the perfect fix to this problem, allowing Godrej Appliances to display its entire range catering to the premium needs of our customers.
Do you think the consumer market is still feeling the impact of demonetization and GST?
The aftermath of demonetization lasted till the first quarter of 2017 which remained flat post which sales started to show a growth. However, the recovery of the demand for consumer durables from the effects of demonetization needs to be discussed in conjunction with the impact of GST, which started to trickle in since May ‘17.
We saw a boom in sales pre – GST implementation, riding on the offers levied by retailers, followed by a lull post the implementation. The appliance industry is expecting a revision in the GST rate in the upcoming GST council meeting, which can significantly propel growth.
The government recently hiked import duty on electronic items to encourage domestic manufacturing. According to you, what other benefits are to be expected with this move?
We welcome the increase in customs duty from 10% to 20% on import of microwave ovens. This will benefit and promote domestic manufacturing of microwave ovens, supporting the government’s initiative of Make In India.
What are your special plans or arrangements for the rural market?
India’s rural electrification was affected by quality issues which impacted the adoption of appliances. This is slowly seeing a turn around in the past few years. With an increased government push, we expect the electrification quality to pick up driving penetration of appliances significantly. The focus is therefore on ensuring reach and availability in Tier 3 and Tier 4 towns which could become hubs for rural sales in times to come.
What new customers can expect from Godrej in 2018?
The year 2018 will witness a slew of product launches across categories starting with the ongoing launch of the premium end direct cool refrigerator Godrej Edge Duo Flow, India’s first single door direct cool refrigerator with a separate vegetable drawer - a huge innovation in the refrigerator category. Similar launches based on consumer insights can be expected this year.
On top of this, we will also be offering exciting offers to our customers on the shop floor. We are also evaluating multiple innovations in other categories to strengthen our existing operations. All put together, we are heading towards a very exciting 2018.