Panasonic India, the local arm of the Japanese consumer electronics giant, expects to double its revenues over the next three years in its consumer business, which comprises Anchor Electricals, mobile phones, air-conditioners, refrigerators, televisions and washing machines. Panasonic posted sales of Rs 10,200 crore for the year ended March 31, 2018, compared with sales of Rs 9,600 crore a year ago. Nearly 80% of the sales came from the consumer appliances business. The focus now is on being more autonomous in India to give a fillip to decision-making to stimulate growth and research and development, Manish Sharma, president and chief executive, Panasonic India and South Asia, tells Fortune India.
The consumer appliance business has done well. What are your expectations of it in the future?
A majority of the growth will come from the consumer appliance business. There we are looking for 30% growth to happen this year. It may sound a little too optimistic but the fundamental backdrop is based on two considerations. One, we have started the refrigerator factory, which is a new investment that we have made in the country. Production started from April 2018. Refrigerators, after TVs, will be the biggest category in the country. So, in terms of the number of units, this is almost an 11-12 million-plus opportunity, while TVs are a 15 million-plus opportunity. We believe we would be able to drive a high growth on these [opportunities]. Second, the industry itself is going to see a healthy growth—in excess of 10- 12%. In the backdrop of a slower growth of economy which has happened, we believe a pickup in consumption is due this year.
So, what’s your strategy for the consumer appliance business?
The fundamental strategy in the next three-five years in the consumer appliance vertical is to build a product portfolio on three platforms. The first platform is ‘smart’, second is ‘connected’, and the third is ‘energy efficient’. So, our strategy of product development will revolve around these three pillars: how we can make our appliances smarter, how they can talk to people and make life for them more convenient; how they can be connected together and in that process, give a holistic view to the consumers about how they behave, how they consume energy, how they can be more efficient; and finally, how energy efficient and environmentally efficient they are. These are the pillars on which the product development will happen from now on. And of course, it’s already happening in this direction, but these will be the three focus areas. And the prerequisites will be affordability, performance, and the user interface of the appliances.
What will be new when it comes to offerings in the consumer space?
In consumer appliances, slowly we will change the approach of addressing living spaces. In Japan, we have so much, we build houses and provide such wonderful spaces, high in convenience, less in energy consumption, sustainable, 100-year houses. But, here, currently we only sell appliances. There is so much technology that we can bring here… material which will help bring better aesthetics and more durability to the houses. This is one area that we want to strengthen— providing total solutions, not only in the business-to-business segment but also in the consumer space; [we want to] offer a package of better living space along with consumer appliances and other living solutions.
Is there a category you are finding difficult to crack?
In televisions, we are growing quite rapidly and currently we have about 10% market share in the segment. We are a strong No. 4 brand in the country. This space was dominated by Korean and Japanese brands; at one point they were commanding about 72% of the market space, which has gone down. So, we’ve been gaining. When we made a sort of re-entry in 2008, we were less than half a percent in terms of market share. It has been 10 years, and in 10 years we have 10% market share. My aim is, in three years, we should have 15% market share in TVs. I can clearly see that happening. In ACs, we have 7% market share; I feel it will go up due to the transition in technology that has happened in the last one year. ACs’ growth in the industry has been negative or flat in the last two years. Henceforth, especially, the next summers will find good opportunities for ACs. And we will also look at growing the market share subsequently. Then in washing machines, we started the facility in January 2013. There we have 6-7% market share in top-load, fully-automated washing machines. So, we’re gaining some 1-1.5% market share every year.
The market has been particularly challenging in 2016-17. How has it been for you?
My intention for the consumer business is that we want to double revenue over three years, which means about 22-23% compound annual growth. The last 18 months were extraordinary for the industry. The second-biggest category is ACs, which from 2016 onwards has been de-growing or has remained flat. The TV industry, until 2016 was growing at 20% year-on-year, but last year it has only grown about 9%. The average growth in the calendar year of 2017 for the industry is 3.5%. So, because of that, we also got impacted. Our registered growth was about 9% last year. This has happened despite the last 19-20 months of slow economy growth and consumption. Still, I’m very confident, in the next three years we will become double of what we are in the consumer business. Overall, we want to take the Rs 10,200 crore sales to Rs 16,000 crore sales. Only in consumer, we are looking at doubling revenues in three years.
(The article was originally published in August 2018 issue of the magazine.)