‘Rate cuts to spur consumer spending’

The global meltdown has cast a shadow on Indian economy and will impact the pace of growth in the next fiscal, feels Sony India MD Masaru Tamagawa. It is a fact that Indians are good savers. So once the sentiments improve, growth will pick up, particularly in consumer electronics, Tamagawa adds. Excerpts from an interview


How do you see the Indian electronics industry in the deepening slowdown?

Modern trade through retail stores and brand shops is fuelling growth of the consumer electronics industry. Indian consumer electronics industry is worth Rs 12,500 crore currently, while notebook, laptop and PC market alone stands at Rs 10,000 crore. Both the markets have been growing at 10% year-on-year and we expect similar growth this year. Product categories such as plasma televisions, laptops, digital cameras, play stations, MP3 players and hometheatres will drive the growth of Indian electronics market. LCD televisions have shown exceptional growth during April-December last year and would continue to grow this year too.

What do you think will drive growth of the Indian economy and consumer electronics market in the next few years?

Though India is not insulated from the global economic downturn, the impact has not been as severe as elsewhere. It���s because Indians are good money savers and this is an accepted fact globally. India is a demand-driven economy and not export-oriented. On the other hand, people residing in the west and Middle East are spendthrift and so have been worst-hit by the slowdown. India will continue to grow but at a slow pace in the coming fiscal. Consumer spending will catch up provided interest rates are slashed further.

How has Sony India performed of late? How has the slowdown affected your business plans?

New models with enhanced features and attractive finance schemes pushed up our sales in the first three quarters. While the sales of LCD televisions and playstation trebled during the nine-month period over the previous year, sales of MP3 players grew seven times. Sony Bravia within the LCD TV category led the growth. On the other hand, Laptops and digital cameras registered 60% and 40% growth respectively. Hometheatres grew 30% over the last year. CRT TV, DVD players and some models of Hi-Fi audio systems did not perform so well. Some of these categories may even degrow this year.

This strong performance enabled Sony India post 25% growth to notch up sales of Rs 2,830 crore in April-December 2008 against Rs 2,264 crore in the same period a year ago. The rupee-dollar exchange and the overall economic slowdown will not make the fourth quarter results very impressive. We anticipate slowdown in sales this quarter over the first two quarters but will end this fiscal with more than 20% growth over 2007-08.

Does Sony India have any specific plans to tackle a tough year ahead?

For us, India is a strategic growth market. In the present scenario, we have to look at the market product by product. Need of the hour is to differentiate between the categories that will grow and those that are likely to fall flat. Our marketing investments will be concentrated towards those products categories which have been growing in the past few years. Besides launching new models, we���ll enhance our sales channel by expanding the number of Sony centres. There will be more emphasis on developing various training programmes for the employees. The duty structure is currently high on consumer electronic products and needs to be brought down further.

What are your plans regarding manufacturing in India? Any plans to downsize workforce in India?

We had manufacturing operations in India, which folded up a few years ago. The company has no immediate plans to produce products locally. But, we may have to increase the prices of our products if the rupee weakens further. The company largely depends on imports and the depreciation of the rupee has made imports costlier and we���ll be left with no choice but to pass on the burden to the end users. There are no plans to downsize workforce in India since we think the most important resource for any organisation is the human resource.