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Godrej Appliances turnover seen falling by 9%

Godrej Appliances may slip into the red this fiscal due to a flat growth in refrigerator sales and a degrowth in washing machines. Total sales turnover is expected to fall by about nine per cent to Rs 6.5 billion.

The company, which till recently had a joint venture with US major GE, has embarked upon a major cost-cutting exercise to minimise the expected losses.

Upto Rs 250 million is expected to be saved through its numerous quality and supply chain management initiatives, a senior company official said in Delhi.

"This year could be a loss year for us, much like it would be for many other players in the white goods and home appliances industry. Turnover is likely to be down to Rs 6.5 billion from Rs 7.13 billion in 1999-2000," managing director, Godrej Appliances, Vijay M Crishna told PTI.

He said that the company, which has posted flat sales growth last fiscal, is expected to embark upon a `balance scorecard' programme to identify more areas where costs could be optimised.

"Our strategy for the year ahead is clear. We want to optimise costs, offer better quality, CFC-free products with improved features and focus on increasing exports," Crishna said adding that the exports at present were a dismal 7,000-10,000 units per annum of refrigerators.

With the CFC-free products, Godrej Appliances hopes to double exports to about 20,000 units of refrigerators, mainly to the neighbouring markets including Sri Lanka and Bangladesh.

Crishna said the company has manufacturing plants in four locations in India that manufacture refrigerators (between 100 -400 litres capacities), washing machines (both fully and semi-automatic) and also assemble air conditioners.

Due to falling sales, Godrej Appliances has chosen the outsourcing route to optimise costs, since all purchases are negotiated and idle capacity avoided. Currently, as much as 70 per cent of the company's production is being outsourced.

While Crishna admitted that the Koreans - Samsung and LG- were way ahead in both sales and brand awareness parameters compared to Godrej, he said the company was eyeing the top slot at least in refrigerators, over the next two-three years. It's strength will be the brand name and its product features.

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