The Demand For Inverter ACs is Rising Now: Amrit Electronics

• 43 and 50 inches TVs have become more affordable due to local manufacturing.
• Digital Payments have presented an easy option for consumers and retailers.

Yogesh Dhawan (YD), owner, Amrit Electronics in an exclusive conversation with EFY Group’s Rajeev Kumar spoke about consumer electronics retail business in Gurugram, Haryana.

He said, “Manufacturing of consumer electronics has started at a very good pace in India. When a brand imports consumer electronic goods from another country, the maximum transaction is done in Dollars and when the Rupee value depreciates against Dollar, these products get more expensive.”

He continued, “However, in segments like 43 and 50 inch TVs, the case is completely different. I think manufacturing these in India has given a boost to the market. It is clearly evident that the prices of bigger size TVs have come down substantially. I credit local manufacturing for that.”

Here are some more interesting excerpts from the conversation

ACE- When did you start this business? What prompted you to start this business?

YD – We started this business in 2003. Amrit Electronics at that time was a direct dealer of BPL brand. We were also dealing with some of LG’s products at that time. BPL used to be one of the best-selling consumer electronics brands at that time.

I choose this business as there was lots of growth in consumer electronics back then. The demand for consumer electronics was peaking here. We had a perfect time, location and finances to enter this business.

ACE- What’s your vision for your business and India’s ACE industry?

YD- Amrit Electronics now retails premium consumer electronics. We aim to become a one-stop-shop for consumers who are interested in buying premium consumer electronics in Gurugram and nearby cities.

I think this is a tough time for our business. We are facing severe competition from the online sales channel. The likes of Amazon and Flipkart are dominating the consumer electronics retail scene at the moment. They have the ability to offer price points that are hard to match. As earlier mentioned, we deal with high-value products only. If you sell a product of Rs 50,000 or and you are not able to earn eight to 10 per cent margin, it is of no use.

Demonetization and GST Implementation have also set us back in terms of business value. The demand of consumer electronics in the offline channel is decreasing.

ACE – How do you see India’s ACE (Appliances and Consumer Electronics) industry growing from here?

YD- Consumer electronics manufacturing is increasing in India. When a brand imports consumer electronic goods from another country, the maximum transaction is done in Dollars and when the Rupee value depreciates against Dollar, these products get more expensive.

However, in segments like 43 and 50 inch TVs, the case is completely different. I think manufacturing these in India has given a boost to the market. It is clearly evident that prices of bigger size TVs have come down substantially. I credit local manufacturing for that.

ACE – How’s your business doing in this FY? There’s a lot of news of growth from the ACE sector—are you witnessing it too, in your business?

YD- We are witnessing good growth in AC and smart TV verticals. The demand for inverter ACs is rising here. One major reason behind that could be inverter AC’s capability to lower power bills by consuming less electricity. Company’s claim that these consume up to 40 per cent less electricity than normal ACs. The best part is the fact that inverter ACs are now available at prices of normal ACs.

Additionally, ACs and TVs are now becoming necessity products. A lot of people want to install these in every room of their homes. So if a consumer has the spending power, he does not hesitate in buying separate ACs and TVs for all the rooms in his house.

ACE- Any new strategy implemented by your team in this FY that’s resulting in growth?

We have placed a wide range of Inverter ACs on display. Amrit Electronics also tries to drive sales using schemes as per seasons. We even announce offers and give away freebies like stabilizers with the purchase of ACs. Helping consumers get consumer electronics financed is also working out for us.

ACE – Any product segments or brands that are affecting your business positively or negatively?

YD – Apart from the online sales channel we are facing tough challenges from large format retailers like Vijay Sales, Croma, Reliance Digital. Consumer electronics brands prefer them as they order products in bulk. Additionally, they are also offered more margins than us.

We try our best to negotiate with brands for better schemes and select models that are different from the markets including online and large format retailers. This helps in decreasing competition. We try to pitch additional warranty or AMCs on consumer electronics products.

ACE – What’s your strategy for products that get discontinued or obsolete? How do you avoid losses on them?

YD- We try to liquidate existing stock before the launch of new products line up. We also make purchases at that time carefully. Every company updates its product lineup according to seasons now. So, whenever any stock is stuck in our store, we request brands to support us in liquidation of those. At times we get the support and at time we do not.

It is simple if brands suport us we are able to avoid losses and if they do not, we most of the time end up in losses.

ACE – How are you handling the challenges created by online portals like Amazon and Flipkart?

YD- There are challenges from the online sales channel but since the new Govt policies came in, those challenges have reduced to some extent. We also try to place different products in the display but still when online channel tries to drive sales through discounts, we suffer.

ACE- Are you accepting digital payments from customers through Debit Cards, Credit Cards, PayTM, etc? Are you seeing an increase in the same? Do you have a finance facility? Do you have finance facilities for consumers?

YD- We are accepting digital payments and we are witnessing good growth in that. Digital Payments have presented an easy option for consumers and retailers. Earlier, we had to wait for up to three days to get cheques cashed from banks.

We have almost all the major finance facilities. These include Bajaj finserv, Home Credit, HDB Finance and Axis bank. We also offer finance from credit cards. Now maximum consumers do not make full payments at the time of purchase, they prefer to go with the finance.

ACE- What’s your take on the erosion of margins because of commissions on cards, payment gateways, etc on digital payments? How do you manage this challenge?

YD- Digital payments cost us around 1.5 per cent but we have to bear that cost. In case our margins are getting a hit due to extra discounts, then we propose Google pay, Phone Pay and other UPI Payment methods to the consumer.

ACE- Do you have the ambition to launch your own brand of products in the future too? If yes, any product range that you’d like to?

YD- There is a lot of competition from the online channel, and from offline retailers. The profitability is decreasing so we are planning something different. We are planning for a new brand and probably we will launch products like water purifiers and LED TVs under this brand.