By Srabani Sen
As predicted immediately after the Japan quake, consumer electronics companies in India are facing the impact of the price rise of key components such as flat panels, semiconductors, chip sets, flash memory, and LCD/LEDs. This has started pushing up the prices of LCD and LED products, particularly TVs and monitors, which use these components. LG Electronics India Pvt Ltd (LGEIL) is the first to announce a price hike for its monitors owing to the constant escalation of LCD and LED panels in the international market. An LCD panel’s cost constitutes about 70 per cent of the cost of a finished product.
Electronics companies in India also plan to increase prices of flat panel TVs like LCDs, plasma screens and LEDs by 8 per cent. Prices of refrigerators, washing machines and air conditioners may also rise by 5-7 per cent. CM Singh, Videocon’s vice president, sales, has said the company plans to hike prices of TV sets by 4-5 per cent since the Indian Premier League (IPL) finals are over.
Impact of component price hike
Considering the current scenario, the panel price increase trend will continue till September 2011, industry analysts believe. The uncertainty is likely to hit all consumer electronics players, as Japan accounts for close to 20 per cent of the world’s LCD and LED panel production. “Japan is a hub of manufacturing items like mother boards, memory cards, etc. Even if most plants are not directly hit by the disaster, manufacturers in India will be affected by transport problems and power outages across Japan,” opines Ajay Sharma, country manager, ViewSonic Technologies India Ltd.
Will ViewSonic also hike costs of monitors? “With the input cost of components rising, it is likely that the cost of monitors and other electronic goods will increase. However, our prices will remain competitive in the market as we use the latest technology. We are launching a range of new models with the latest technology,” adds Ajay Sharma.
Although Salora International has not yet hiked the price of its products, it is considering a 3-5 per cent price hike on some of its products. “This price hike is related to inflation on commodity raw material prices. Therefore, this price increase will last till raw material costs go down again. However, neither our dealers nor our sales rate will be affected,” says MK Khanna, general manager, operations, Salora International.
Dealers yet to feel the impact
Although the price hike by vendors will impact the dealers as well, they have still not sensed the impact. When asked to comment on the LG price hike, a consumer goods dealer in Noida, says, “In 2009 also, there was a 7 per cent hike in LCD panels. So this price rise is not new. However, we have other brands to sell, the prices of which have still not been hiked by their respective companies. Soon, we feel, there will be a hike in TV costs as well, since the companies were only waiting for the IPL season to be over.”
However, some dealers believe that this price rise is nothing but a tactic to create pressure on the dealers to stock more products.