Avneet Singh Marwah , Director and CEO , Super Plastronics Pvt. Ltd. (Kodak TV India)
“There was heavy impact on sales for the first month post GST, but we are optimistic about the fast approaching festive season and see a steady rise in sales as it approaches.”
In H1 2017 the consumer electronics industry suffered from two major hits: demonization and GST implementation. In eight months, the momentum of sales slowed down twice and had come almost to a halt and India lost its fastest growing economy tag. In quarter ending March 2017, GDP was at 6 percent, growth figures being the lowest since quarter ending December 2014. In June, there was a major slowdown in the manufacturing sector where output was as low as 50–60 percent in comparison to H1 2016 and the LED segment was growing at a pace of 30 percent annually.
We see the consumer shifting toward smart TVs. With Internet now being made available widely at giveaway prices, consumers in Tier-III cities are looking at smart TVs. The average size being purchased has now changed from 32 to 40-inch in certain areas. Consumers are wary of the TV being purchased and the specifications rather than only depending on the brand name. By 2022, we will have a whole new array of technology in terms of research-based technology like foldable TVs, thinner screens, technologies surpassing 4K and more than 55 percent of the world will change their LED TV to 4K technology.
In the current year, availability and price of panels has been more stable as compared to the highly volatile pricing last year. In H2 2016, we saw a steep increase in the prices of 32 and 40-inch panels almost as high as 25–30 percent, which impacted sales around the festive season.
Challenges. The major challenge being faced for LED TVs in the affordable category is the fake, grey, or cash market. This is impacting our economy negatively. There is a tax revenue loss of Rs. 1500–2000 on each 32-inch set. This parallel market is generating revenue of about USD 1.5 billion and growing at a rate of 25 percent per annum. These TVs are declared at a wrong rate of duty or at 50 percent under invoicing, due to loopholes in our system. As a result, many TV brands had to shut down their operations in the past. However, post the introduction of GST, we see a slowdown in this market and hope that this move will result in complete elimination of the same. Another big challenge is logistics where we lack good infrastructural support despite our government taking major steps to correct the same. As the GDP of our country is falling, purchasing power is also declining which becomes a big concern. The major hit is on the rural sector where it will take time for a cashless economy to emerge.
Opportunities. The average selling size for TVs in India is 32-inch in the rural market and 40-inch in the urban market. We can see demand of bigger sizes increasing at a steady pace as the prices are becoming more affordable. By end of 2020 the average size will become 50-inch and almost 80 percent of the market share will belong to smart TVs. We, as a manufacturer, are majorly focusing on smart TVs in India. Consumers are wary of the TV being purchased and specifications of the same rather than only depending on the brand name, which is a very good sign for Kodak HD LED TV, as we believe in giving the same technology at a better price.
In India, the biggest opportunity is the market size, with increasing per capita income. The price of TV sets is up by 5–6 percent from July 1, 2017, with the GST council implementing a 28 percent tax. There was heavy impact on sales for the first month post GST, but we are optimistic about the fast approaching festive season and see a steady rise in sales as it approaches.
Implementation of GST did not affect Kodak HD LED TV, as ours is an affordable brand. Today not only we, but many brands face difficultly due to the products which are fake, sold in the grey market, or sold in cash, which is impacting the market as well the economy negatively. So, with the one-country one-tax policy, I feel all these practices will slow down. There is a growth as the festive season is around the corner and the feel of the market in general is positive. Kodak HD LED TV has a good market share in the online segment. We have started expanding offline tremendously through our existing infrastructure and our mission is to capture 3–4 percent of the market by end 2018.