Demonetisation taken a toll on consumer durable industry: Voltas

However, we have offered a lot of discounts and schemes to customers, he added.Below is the verbatim transcript of Pradeep Bakshi’s interview to Reema Tendulkar & Latha Venkatesh.

Reema: If you could first tell us how your two key segments, electro-mechanical projects (EMP) and second, your air conditioner (AC) business, how is it done in the last two months and what the hit has been on account of demonetisation?

A: I would speak about the consumer durables industry and the consumer facing business of Voltas because that is what I take care of.

Demonetisation has taken its toll on overall consumer durable business. Sales and business is down in general. Initial impact in the month of November, when it was announced, the impact was a bit low because people were still using the old currency notes and all and exchanging them. However, December has seen a bigger impact especially in the Tier-III and Tier-IV towns where it has been impacted to the tune of more than 50 percent. And even in the bigger cities, the impact or the effect of this is about 25-30 percent on consumer durable business.

Latha: You said 50 percent fall in the some weeks?

A: In Tier-III and Tier-IV towns, the business is consumer durable business, regulators, washing machine, air conditioning, so overall business is down in these areas, Tier-III and Tier-IV towns.

Latha: Winter would anyway not be a time when people would air conditioners.

A: No, this is like to like, comparison with the last year sales over this year. This is what is being compared and people are trying to talk the comparisons. Besides that, even trade partners are scared of stocking up because probably the secondary sales are affected in a big way, so they are holding back inventories and even the brands are planning to cut down on their inventory costs. Commodities, on the other hand, actually is having another impact, commodities are going up, there are cost pressures on that and on top of it, the traders are also having goods and services tax (GST) blues as to when is it going start, what are the impacts likely or there will be no impact on that. So, all this needs a bit of clarity and also cash availability is also an issue because even if somebody wants to buy. All in all, this has affected the business overall. However, from our side we are trying to help the consumers. Industry has come up with a lot of finance offers. EMI holidays have also been announced. No interest has been offered to the consumers. We are trying to help them, but it is not working out.

Latha: How much of your sales are in digital payments, cheques or cards and how much is cash?

A: As I said in the smaller towns the cash payments were in the tune of 70-75 percent, people used to pay cash only whereas in larger towns and major cities, the cash component was about 25-30 percent only. The effect is about that only. However, cash availability is also an issue. Probably with the passage of time and also when the summer sets in, in the next two-three months, things should ease out when the cash is available and also by then people would have also learned, in smaller towns, how to use the digital way, Paytm and other usage of digital. Probably things should improve over the next few months.

Latha: Is that the sense you are getting that it is a one quarter pain that by February or March it will improve? Are you getting that sense at all?

A: Yes.