Consumer durables sector will improve after June: Videocon

The March IIP number was dismal, it contracted 3.5%. Consumer durables sector growth was up just 0.2%. Venugopal Dhoot, chairman and managing director of Videocon says, he is not surprised by consumer durables sector growth. “In March-April-May, consumer durable demand is always not that good,” he explains.

He expects the sector to improve after June. Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video. Q: It is rather bad performance even for consumer durables in the month of March. How is the situation on the ground? Are you seeing a fall in demand for consumer goods? A: Consumer durable demand was going down. We are not seeing that much fall. In March-April-May, consumer durable demand is always not that good. When the season starts in August, at that time consumer demand goes up. So, neither we are very happy nor we are unhappy. Now, look at the GDP growth, when we say GDP growth is going to 7%, the consumer durable growth has to be more than two times, it will be 15% and that is going to happen. Third, you will have to see across the globe, there is recession going on whereas in India we see growth. Apart from that, Reserve Bank is not certain what to do about the interest rate. They do not know how to control inflation and infrastructure investments are not coming. Apart from that, rupee depreciation is one of the factor. Foreigner’s confidence is going down. If you look at that, you will see that economy is not doing as well as Manmohan Singh wanted. There are economist people sitting over there like Montek Singh Ahluwalia, Pranab Mukherjee and Prime Minister himself. They will come out with some solution and talks are going on that. Q: How the current quarter will look like, April-June and even for that matter April-September the half year? Are you expecting any improvement in consumer durables? Are you expecting any improvement in the capital investment cycle? A: Consumer durable, definitely after June, there will be increment. Budget spending is very high. People who are living at the bottom of pyramid are getting money and they will spend. So, consumer durable, I am not worried. Capital good, one thing is there capital good investments are not coming. Capital good production is going down. Capital good may come down further. But capital formation will take place because there are certain other industries are doing well. Although industrial production has fallen down, it won’t fall down that much again in next year, next six months should be good. Q: Even assuming the Reserve Bank were to cut by 25 basis maybe in June or July, is that really going to make a difference? There are a lot of industrialists who are under CBI watch or under court watch or police watch, do you think investment will really pick up even, if you were going to get another quarter basis point cut in the rates? A: Twenty five basis point cut is not much. If it is atleast 75 bps or 100 bps, there will be euphoria in Indian industry and there will be demand and inflation also will be in control. We have lost the confidence of foreign investors. India euphoria, which was there last year, is not there. India flavour across the globe has lost. That is the reason you see all these things are happening in India. Once we can establish our creditworthiness by doing right thing in right direction, not touching foreign companies like Vodafone etc and sending a good message across the globe then Indian economy will be once again on track and 10% growth will happen.