Consumer durable companies with a manufacturing base in India are planning a price rise by March this year due to rising domestic steel prices.
Flat steel producers -- SAIL, Tata Steel, Essar, Bhushan Steel and JSW -- have increased prices up to Rs 2,000 a tonne on the back of rising demand.
Flat steel products are primarily used by the white goods and auto industries, while long products are used in the construction sector.
Internationally, steel prices had firmed up and there was a surge in demand. Based on this, steel companies have raised prices of flat products.
LG Electronics, for instance, is looking at increasing flat panel prices by two per cent, since the module price (the non-plastic part of panels) has increased by that much. Amitabh Tiwari, head of sales, said: "Our profit margin from flat panel televisions is on the edge. We can absorb a maximum of 1-1.5 per cent increase in input costs of flat panels." LG, since July 2009, has increased prices twice during the current financial year, a total of 6.5 per cent, for flat panel TVs. Across the board, LG had last increased prices in July by 3-3.5 per cent."We usually try to absorb any escalation in input costs. So, if the increase in input costs is by 5 per cent, LG would increase prices by 2-3 per cent," said Tiwari.
Godrej & Boyce, on the other hand, is already talking to its suppliers on how to pare costs.
Kamal Nandi, VP-marketing, Godrej & Boyce, said: "We have not done any price correction this fiscal. But, if steel and copper prices remain at the current levels, we will have to increase prices of products within a month."
Whirlpool India increased prices of its refrigerators and washing machines by two per cent, on an average, in December. Shantanu Dasgupta, VP - corporate affairs and strategy, said: "Commodity prices like that of oil, plastics, steel and copper, have gone up, so we decided to increase prices. We are increasing prices after nearly a year."
Whirlpool had increased prices by 4-5 per cent in phases between July and September 2008. then, it reduced prices by over five per cent, in phases, in 2009.
Now, the company is again increasing prices by two per cent, to pass on to consumers the increase in input costs.
However, durables companies like Sony and Panasonic, who do not manufacture products in India and depend on imports, are not looking at a price correction immediately.
Globally, metals' prices are not as expensive as in India now.
Sunil Nayyar, general manager of Sony India, and Sabiha Kidwai, GM-marketing and corporate strategy, Panasonic India, said they imported all consumer products from various countries and therefore the raw material price rise in India would not affect them immediately.
Globally, steel prices had recovered by about $50 (over Rs 2,300) a tonne to about $450 (nearly Rs 21,000) a tonne, after falling by $150-200 (about Rs 7,000-9,300) a tonne in the past two months due to fear of over-capacity in Chinese steel mills and the import threat.
Image: An electronics shop employee in Jammu watches visuals at a shop in Jammu. | Photograph: Amit Gupta/Reuters
