Vote on Account 2014: Excise duty cut to have limited impact on consumer durable companies

The 2% excise duty cut proposed in the interim budget on consumer durables will have limited benefit for the companies such as Voltas, Whirlpool, Titan Ind, Bajaj electricals, Hitachi home, TTK Prestige and Hawkins Cookers.

Although this is a step in the right direction, its seems its too little too less. The last couple of quarters have seen the domestic demand for the consumer durable goods dropping due to the overall slowdown in the economy. The 2% cut may give a marginal boost in terms of volumes, but it still seems to little. The duty now applicable would be 10% instead of 12%.

What would be more important is the cut in the interest rates. “Our observation says that consumer interest is more influenced by the EMI cut rather than custom duty cut.”, says Abneesh Roy, consumer analyst, Edelweiss financial services.

The stocks of the companies such as Voltas, Bajaj Electricals, Whirlpool and others have not shown any major buying on this proposal. (see table)