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Dasgupta also added that market share is another positive story. They have launched some new products last summer and have done extremely well over the last three quarters. They have grown the market share by almost two percentage points. So, overall their market position has strengthened.
Below is the edited transcript of his interview to CNBC-TV18
Q: What do you think about the rate cuts? Do you think 25 basis points cut that we are likely to see again from the bankers will help improve demand materially? How much do you think easy monthly installment (EMI) should go down for consumer good demand to pick up?
A: From a sentiment point of view this is the only silver lining in an otherwise dark cloud. Therefore, we will have to see how this translates into getting consumers back to buy goods that they deferred.
Having said that the throughput for at least home appliances availing loans etc, you used the word EMI is actually low. The number of financial institutions who lend have come down to barely two. So, there isn't a lot of financing that happens. There is a bit of EMI that happens when one converts credit card purchases into installment payments.
For Whirpool the throughput with financing is not very significant. Going back to the overall sentiment, if this helps to reduce some of the outflows that people are paying through housing loans etc and that translates into a bit of consumer confidence to go back and buy appliances.
Q: What has been the anecdotal evidence so far? Have you been able to improve upon your pricing? Has demand held up? Do you see signs of a revival?
A: Pricing is now no longer an event. It is a continuous affair. For several quarters now we have been seeing pressure on pricing. Whether it is commodity, inflation or it is currency related. So, pricing is very dynamic now. Prices have moved up. Year ago prices were probably 10 percent or 15 percent lower than what it is today. That indeed has impacted the off take because consumers are in any case battling with inflation on several fronts.
Our industry thrives when there is disposable income. This quarter our result was severely impacted. For our industry and not just us because Diwali sales did not happen the way it usually happens. Consumers chose to spend their money differently if they spent at all. Certainly they did not spend in home appliances. Therefore our top-line took a bit of beating.
Q: A quick word with regards to your earning. Can you just give us a sense in terms of the market share that the company is clocking at this point in time in terms of volumes? How exactly are the margins going to pan out going forward?
A: While this quarter might have disappointed a number of our shareholders at a cumulative level, we are growing on our top-line by about seven percent and net by almost 30 percent. This quarter was so reliant on Diwali. If Diwali off take is not as buoyant as it ought to be then it puts pressure on your top-line. Then there is a cascading effect all the way down.
This is also a time when traders tend to build up stock in the expectation that there will be sales. There is also a lot of promotional spend that takes place. So, net realisations do tend to be slightly lower in this quarter than the others.
This time because consumers did not shop the way they usually do, the remaining months of the quarter the industry actually ran down inventories. So, it put a lot of pressure on sales which is why our top-line is flat.
Coming to market share again that is another positive story. We launched some new products last summer and we have done extremely well over the last three quarters. So, we have grown our market share by almost two percentage points. So, overall our market position has strengthened.
To some extent net realisation is low. One also had continuous pressure on commodities. So, all of it could not be passed on through prices.
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