The electronics company from the Tata Group, named Voltas has recently announced that it is not planning to make a price hike for its air-conditioners in spite of the rising input costs. The company officials have stated that it is thinking of countering the rising input costs through high volume growth. The company has also said that though its competitors have already passed on the burden of extra input costs to the consumers, it is thinking of waiting for some more days and not to do so in the near future.
Informing all these, the Executive Vice-President and Chief Operating Officer of Unitary Products Business Group, Mr. Sanjay Johri said, "Even though we are feeling some of the cost pressure, we are going to hold onto the price line. Our estimates say that the increasing metal prices globally will correct themselves in the next two months". The sources from the industry have informed that the steel, copper and aluminium are contributing to about 70 per cent of the total input cost of an AC, at a selling price of Rs 100. Mr. Johri added that as there is inflation of metal costs in the international market, four to five per cent of the sales revenues of the AC manufacturers in India have been affected vastly.
While explaining his thoughts, Mr. Johri said, "In an industry, where the profit margins are as low as six to seven per cent, a three to four per cent increase due to high input costs creates severe pressure". However, he added that the company is still thinking positively that the price correction will happen within a period of two months and it is not going to transfer the prices to the consumers, immediately. He also said, "We are able to do this, partly because of the reduction in excise duty in the Budget from 16 to 14 per cent". He further said that this is actually a balancing act and the company is hopeful to counter it through focused volume growth.
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| Posted : 3/27/2008 |
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