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Consumer goods firms expect spurt in sales

The Govt’s decision on the recommendations of the 6th Pay Commission, coming as it did ahead of the festive season, sprung hope for inflation-battered retailers and consumer goods manufacturers.

business Updated: Aug 14, 2008 21:09 IST

The government’s decision on the recommendations of the Sixth Pay Commission, coming as it did ahead of the festive season, sprung hope for inflation-battered retailers and consumer goods manufacturers.

With salaries of nearly five million central government employees set to rise substantially, and the government doling out about Rs 12,000 crore in the first tranche of arrears, the season of Dussehra and Diwali may see a spurt in sales of major consumer durables and other big-ticket items.

“Due to a slowdown and inflation, many consumers had postponed their purchases, which will fructify this season,” said Suresh Khanna, secretary general, Consumer Electronics and Appliances Manufacturers Association.

The consumer durable market in India is estimated at about Rs 32,000 crore and grew by about 12 per cent last year, according to the Federation of Indian Chambers of Commerce and Industry. So far this year, though, growth has been sluggish in the wake of rising inflation and high interest rates. The Cabinet decision is expected to reverse the trend.

“The announcement is very timely,” said Tushar Bhattacharya, senior economist at FICCI. “Once the festival season sets in, sales of high-end products like plasma TVs will increase by 40-50 per cent.”

Ravinder Zutshi, deputy managing director at Samsung India, said he expects sales to go up.

“Whenever there has been a good bonus disbursal or salary hikes of this nature, the industry has benefited,” said Vivek Sharma, chief marketing officer, Philips India. “In the current scenario, what this development will do is to make up or neutralise the downward trend and put the demand trajectory on the growth curve again.”

While most are expecting shopping sales to boost, some also feel that not all money may be spent on purchases.

“While this will add more thickness to wallets, there is a fair chance of the money being put into financial instruments for investment purposes,” said Manoj Ganjawalla, vice president, marketing, Godrej Interior.