Panasonic India launched Econ range of energy-efficient and eco-friendly air conditioners (ACs) for the high-premium and mid-economy segments. Even as Panasonic has shut down 27 of its 558 plants worldwide and cut 15,000 jobs in other countries, the company continues to pour money into its Indian arm and is expecting to reach Rs 4,300 crore business in the country by the end of this year. Daizo Ito, CEO, Panasonic India, is the first senior Panasonic Global director to be stationed in India, who also does oversee the entire Panasonic operations from Gurgaon here. DNA met him to talk about the company's plans. Excerpts:
Panasonic's Japan business has been hit in a big way. What repercussions do you see for its India business?
Since Japan is into recession, not only Panasonic, but most players in that market are finding it tough to sustain. India for us is a strategic market, and we want to expand our footprint here. We are aiming for a 330% growth in the consumer durable goods with addition of our Econ AC range. We are eyeing a 10% market share in the AC segment alone, this year. Our investment in India will increase and not decrease.
What kind of sales do you expect for the Econ range of products and how will you market it?
We are expecting 12,000 unit sales by end of 2009 for Econ. We closed India business at Rs 2,200 crore in 2008 and this year plan to take it to Rs 4,300 crore. We will invest $130 million towards marketing and advertising in 2009 with 1,000 spots marked for general entertainment channels (GEC) during March and 2,500 spots for April- June. We also will have 70 inserts in print media during March.
What expansion are you doing, geography-wise?
Apart from being present in major cities, we are aggressively expanding our channel partner network pan-India and will have 500 of them by end of this year. We will be present through major chain stores, major distributors and modern trade. Along with this, we will increase after sales service network too.
Are you going to start more manufacturing units in India?
We will continue to invest during 2009-10 towards products, distribution and servicing expansion and have marked the year 2011 for increasing manufacturing units in India. For this, we also are seeking support from governments of some states, but we do not plan to have more factories immediately. Most of our products are imported from Thailand and Malaysia and currently, we are manufacturing LCDs and home appliances from our five factories in India.
Will you be looking to revisit the pricing strategy given the business slowdown in consumer durables?
I cannot discuss specifics on our pricing strategy for India. All I can say though, is that it won't be a viable business proposition for us if we are losing money by selling a product at a certain price. So right pricing for the right product arrived at keeping in mind the quality and efficiency is what we are doing for the Indian market.
Are any initiatives planned to help customers make that purchase decision?
There are quite a few, in fact. For instance, we are working on aligning with financial services companies that will help customers with loans for purchasing our products, especially in the high-value category. We are still in discussions with a few companies on offering this facility.
In addition, there are products being tweaked especially for the Indian market, keeping in mind the needs and requirements. One of the examples is our range of 'vegerators' (inverted refrigerators with the freezer at the bottom) have being designed specifically for the Indian market. Similarly, there would be other products across various categories that will be introduced at regular intervals.
Let's talk about your distribution channels... Any challenges there? Any changes planned?
There aren't any challenges that we have come across with our trade partners, including modern retail. In fact, with our enhanced focus on marketing this year, they should be getting much more support from the company towards brand-building and below the line activities to enhance business in their respective markets.
What categories are bringing in the revenues for Panasonic India?
In the consumer electronics space, it is television category, particularly the LCD and plasma TVs are main business drivers. This is closely followed by refrigerators, washing machines, air-conditioners and office automation products. Of late, we have started seeing good enquiries for safety and security-related products. So we envisage this to be a new product category contributing significantly to the revenues from Indian operations.
What is your retail to institutional business ratio?
It is 50:50 at the moment for us in India. Going forward, we don't see much change in this.
Are you also exploring OEM (original equipment manufacturer) business opportunities in India?
We intend to do some work in that space for Indian companies, but nothing has been decided on that as yet.
Talking about Indian operations, how much does the country really contribute to the overall revenues of Panasonic Global?
It is not very significant at this stage, though we are seeing good business potential in the country in the coming years. We envisage India to contribute 5% of the company's overall revenues within the next 3-5 years. On the consumer side, the growth has been over 250% (YoY) while on the systems side, it has been around 150%. However, if I have to put an overall average figure, it should be around 150% on an annual basis. In the coming years, we are targeting over 250% overall average growth.